Allowed

Canara Bank v. M/S. Shresht Industries Pvt. Ltd.

DRT23 Sept 2024OA/19/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the bank's application for recovery of debts from guarantors and mortgagors, noting the dissolution of the primary borrower prior to the lawsuit.

What did the court decide?

The defendants No.2 to 9 are jointly and severally liable to pay Rs.25,22,94,832.17/- along with future interest, and the Applicant can proceed against mortgaged properties.

Canara Bank versus M/S. Shresht Industries Pvt. Ltd. — Insolvency and Bankruptcy | DRT (2024)

¶1

IN THE DEBTS RECOVERYTRIBUNAL - I AT HYDERABAD

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DATED THIS THE 23RD DAY OF SEPTEMBER, 2C24

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PRESENT: GUMMADI GoPICHAND, PRESIDING oFFICER

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oA.No. 19/2C22

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M/s. Canara Bank, Narayanaguda Branch, YMCA Road, Opp. Shanti Talkies, Narayanaguda, Hyderabad - S00 029. Rep. by its Authorized Officer.

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Applicant.

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Versus

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M/s. Shresht Industries pvt. Ltd., 8-2-293 I 82 I A / 727, Plot No.727, Road No.36, Jubilee Hills,

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Hyderabad - 500 033.

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Alternatively:

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Flat No.101, Plot No.243, Road No.lOC, MP & MLA Colony, Hyderabad - S0O 033.

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Alternatively:

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Plot No.46, H.No.8-2 -t2O I 86 I 9 I Al 46, Road No.14, Banjara Hills, Hyderabad-34.

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Sri Pattela Sailaja,

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Aged major, W lo.P.V. Narasimha Rao, Plot No.592, Flat No.305, NS Mountain View Apartments, Arora College, Rd.No.3, Banjara Hills, Hyderabad.

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Sri Pattela Srinivas Goutam,

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Aged major, S/o. P.V. Narasimha Rao, Plot No.592, FIat No.305, NS Mountain View Apartments, Arora College, Rd.No.3, Banjara Hills, Hyderabad.

¶18

¶19

Sri tsavireddy Srinivas,

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Aged major, S/o. tsavireddy Sambasiva Rao, Flat No.302, Vasavi Apartments, Sri Nagar Colony, Hyderabad.

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Pattela Narasimha Rao,

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Aged major, Plot No.592, Flat No.305, NS Mountain View Apartments, Arora College, Rd.No.3, Banjara Hills, Flyderabad.

¶23

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OA.No.19/2022

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6.	PattelaSriGaurav, Agedmajor,Plot No.592,FlatNo.305, NSMountainViewApartments, AroraCollege, Rd.No.3, BanjaraHills,Hyderabad.
7.	ManneBalraj, S/o.late Kistaiah, Agedmajor, Pothireddypalli(V)&(cp) MedakDistrict-5O2295.
8.	SriChimakurthySrinivasaChary, Agedmajor,Occ:Director, D.No.4-133-30,Sai Ram Colony, Puppalaguda, RajendraNagar, RangaReddyDistrict-500 089.
9.	Sri JonnadaKasiVishwanath, AgedMajor,S/o.J.GopalaKrishna, Occ:Director,FF@TejaResidency, Gollapudi,Near Sivalayam Temple, KrishnaDistrict-509352.
	Alternatively: FlatNo.101, Plot No.243, RoadNo.lOC,MP&MLA Colony, Hyderabad-500033.	Defendants.
	CounselfortheApplicant Defendanfs.l[o.1,2,4to6,8&9 CounselforDefendantNo.3 CounselforDefendantNo.7	Mr. ManauGecilThomas Ex-parte. Mr.T. Vijay Kuman Ms. E.UshaRani.

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.: ORDER:-

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The Applicant Bank filed the present Original Application u/s.19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, for the recovery of a sum of Rs.25,22,94,9s2.17ps., from the defendants, with costs and future interest from 01.01 .2022 till the date of realization and to issue Recovery certificate accordingly.

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The averments made in the appli nder:6

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The 1"t defendant i, " yrff'1pl.imiteffo-p"rry"'g.r( is in the line of reducing/manufacturing^liorint<ing ^-3!.^.^{purifica$on systems. The} &

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Loan of Rs.1,00,00,000/

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OA.No.19/2022

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73oLD DPE" car, vide its sanction Memorandum dt.2s.01.2o17. The said loan is repayable with interest at MCLR +0.50% presently g9}% p.a., in 84 EMIs of Rs.r,6o,6srl- and the said loan is secured. byway of hypothecation of the said vehicle. The defendant No.1 issued a letter of undertaking re: Loans/Advances to the Applicant Bank dated 31.01.2or7. To further secure the roan, defendant No.3 stood as guarantor by executing Guarantee Covering Letter and the Guarantee Agreement dt.131.01.20lT in favour of the Applicant Bank.

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ii) The Applicant Bank, at the request of the l"t defendant, issued sanction Memorandum dt.23.o2.2orr, approving the sanction of takeover of existing wc limits of occ of Rs.5,00,00,ooo1- with enhancement to Rs.15,oo,0o,o0o/- of occ/oDBD limit. The said takeover was for the existing limits from the then Andhra Bank (now merged with union Bank of India). To secure the said loan, defendant No.3 created mortgage over application schedules "A" & "c" properties by executing Memorandum of deposit of title deeds dt.Ol.os.2olz, defendant No.6 created mortgage over application schedule^{,,B,,property} by executing Memorandum of deposit of title deeds dt.O1.0s.2017 and defendant No.7 created mortgage over application schedule^..D,' property by executing Memorandum of deposit of title deeds dt.02.o5.20t7.

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iii) The Applicant Bank, at the request of the 1"t defendant, sanctione overdraft facilities to the tune of Rs.15.Oo crores to the l"t defendant on 03.05.2017. In consideration of the said sanction, the 1"t defendant executed the following documents in favour of the Applicant Bank:-

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a) Demand Promissory Note dt.o3.os.20 LT for Rs.15.00 crores;

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b) Common Hypothecation Agreement dt.03.OS.2OlT, thereby hypothecating all stocks of goods such as raw materials, goods in process, finished and goods etc.

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iv) To further secure the sar ) crores, equitable

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mortgage has been create deposit of original title deeds in favour of the

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OA.No.19/2022

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a) defendant No.2 created mortgage over application schedule '(F" property;

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b) defendant No.4 created mortgage over application schedule^(G" property;

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c) defendant No.6 created mortgage over application schedules "B" & "E" properties;

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d) defendant No.3 created mortgage over application schedules "A" & "C" properties;

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e) Sri M. Balraj created mortgage over MBR Garden Function Hall at Sangareddy Mandal, Medak, Telangana State.

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v) Pursuant to the request of l"t defendant, there was a modification of securities by virtue of Sanction Memorandum dt.03.05.2017. The defendants No.7, 5, 3, 4,2 &, 6 executed Guarantee Agreements dt.03.05.2017 for the due repayment of the credit facilities availed by the l"t defendant. Further, defendants No.2, 6, 3 & 5 executed Subordination Agreement dt.03.05.2017 in favour of Applicant Bank. Subsequently on 16.08.2018, the l"t defendant executed Letter of Renewal dt.16.08.2018 for Rs.15.00 crores OCC-ODBD at the rate of l2.loo/o interest. As per the said document, 1"t defendant admitted that the liability as on 16.08.2018 is Rs.16,15,35,955.74ps.

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vi) The Applicant Bank vide Sanction Memorandum dt.13.08.2018, permitted renewal of existing WC limits of OCC/ODBD for period of one year to the 1"t defendant. The security as per the sanction memorandum was assignment of bood debts and hypothecation of stocks. In addition to the existing colletaral, additional collateral was added in the Sanction Memorandum i.e., Commercial MBR Garden Function HaIl consisting of Oflice Building and A.C. Sheet,Sheds construction on land admeasuring 2662 sq. yds., standing in the narne of Defendant No.7.

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il: :: ;:Tir:: ;:J;ffiffiIffiil::;;:' Pr'^n"e

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.. .^1,'r .r, J l1

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vii) sa The defendants No.1 & 3 exeJuted hql"$$Eedffinenttnlo.Ut and Security ,,' ::! -.]i

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dt.O6.O I.2O2O for Rs. 1.OO crgre.in favour of the nppfic_e*ripank.

-OV;ri#

(.t;:xf#

OA.No.19/2022

viii) At the request of the 1"t defendant, the Applicant Bank permitted One Time Restructure of the account of the l"t defendant and the limits after restructuring are as under:-

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NatureofLimit	Limitsafter restructuring	ApplicableRate ofInterest	PermittedRateof Interest
occ/oDBD	750.00	to.750k	10.50%
ODBD	700.00	10.750/o	10.s0%
WCTL	248.67	I1.15%	10.50%
FITL-I	43.7r	11.15%	10.50%
FITL-II	15.35	11.15%	10.50%
TotalFB	1757.73
NonFundBased
TotalNFB	NIL
TotalFB+NPB	1757.73

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ix) The l"t defendant executed Letter evidencing execution of documents on 19.03.2020 in favour of the Applicant Bank. The defendants No.2, 3, 4 & 7

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executed Guarantee covering Letters and Guarantee Agreements dt'2o.o3.2o2o in favour of the Applicant Elank. The l"t defendant executed supplemental common Hypothecation Agreement dt.20.03 .2o2o in favour of the Applicant Bank for Rs. lT ,42,3},OOO / _.

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x) The 1"t defendant executed Letter of Renewar dt.1g.o3.2o2o or Rs.7,50,00,000/- in respect of occ with interest @ ro.os%. The 1"t defendant also executed Letters of Acknowledgement of Debt dt.2 T.o3.2o2o for Rs.6,97,00,0 rg/ -; dt.27.03.2020 for Rs.43,71,000/-; dt.27.03.2020 for Rs'2,48,67 ,ooo / -; dt.or .og.2o2o for Rs. r,45,00 ,ooo / -; dt.2z .o3.2o2o for Rs.15,35,000/- and dt.rr.o4.2021 for Rs.62,6 r,2zg.s9ps., in favour of the Applicant Bank.

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xi) The Applicant Bank, at the request of the 1"t defendant, issued Sanction Memorandum dt.24.06.2O2O, permitting rS€ Capital Demand Loan (WCDL) of Rs.1,45,00,000/- under Credit Support to

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Covid 19 affected customers to arising out of

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Covid 19 outbreak. As per the Lending Rate

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(RLLR) was fixed at 7.650/o. 1'*zT srp six months

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after the first disbursemenl and principal amount was paid within

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18 months as per the said iiihr,$.{r e coltaterali$ *#, for the ;HrS#;'

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OA.No.19/2022

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previous sanction was the same for this sanction as well. However, the Assignment of Book Debts and hypothecation of stocks wherein the value of stocks was Rs.1517.22 lakhs and book debts was Rs.1s6o.69 lakhs as per the stock statement 'in May, 2o2o. The defendants No.2 to 9 stood as guarantors for due repayment of credit facilities availed by defendant No. l.

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xii) Furthermore, the 1"t defendant executed the following documents in favour of the Applicant Bank:-

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a) Undertaking letter dt.06.08.2020 for enhanced credit limits from Rs.17,57,74,ooo1- to Rs.19,o2,73,o00/- and sanction of fresh Term Loan of Rs. 1,45,00,000/-;

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b) Supplemental common Hypothecation Agreement dt.o6.og.2o2o in addition to the earlier Common Hypothecation Agreements executed by the 1"t defendant in favour of the Applicant Bank;

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c) Pro-note dt.06.08.2020 for Rs. 1,45,OO,kOOO/-.

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xiii) Defendants No.8, 9, 5, 3, 6 e 2 executed. Guarantee Covering Letters and Guarantee Agreements dt.06.08.2O2O for Rs.1,45,00,00O1- in favour of the Applicant Bank. Further, defendants No.3 & 6 executed Supplemental Memorandum of Deposit of Title Deeds dt.I6.O6.2O2O favour of the Applicant Bank for the credit facilities sanctioned and thereby defendants No.3 & 6 created mortgage over their immovable properties described in the application schedule. Similarly, defendants No.6 & 2 executed Extension of Memorandum of deposit of title deeds dt.17.06.2020 in favour of Applicant Bank in respect of their immovable properties described in the application schedule. Defendant No.4 has also created mortgage in respect of his immovable properties described in application schedule in favour of the Applicant Bank.

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xiv) Application Schedules',A" to ovable: properties mortgaged in

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favour of the Applicant B^yffid@! les "A" &'C" properties betong to defendant N{.f,n;ffi"^{,,;,RU:</sup> e- " properties belong to defendant No.6; Scheduil8" oroo.ffi o.,o,r}.? fendant No.7; Schedule "F" property belongs tiidtferd+rrf ,Ufl t"t$ "G" property belongs ^gf*

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OA.No.19/2022

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to defendant No.4. schedules "H" & ..r,, re the movable properties hypothecated/pledged in favour of the Applicant Bank.

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xv) As the loan account of the l"t defendant became NpA, the Applicant Bank proceeded under the SARFAESI Act and issued Demand Notice u/s.13(2) to the borrowers/guarantors on rr.o4.2o21. As the defendants did not come forward to liquidate their riability, the present oA has been fired for the recovery of a sum of Rs.25,22,94,gs2.17ps., as on 3r.r2.2o21 with future interest and costs.

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3' The defendants No.1, 2,4, s,6, g & 9 remained ex-parte. The defendant No'3, even though entered appearance through his counsel, did not choose to file his written Statement and as such the right of filing of written Statement of defendant No.3 was forfeited.

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4' The 7tt' defendant filed his written Statement disputing the claim of the Applicant Bank. The contentions of the 7tr' defendant, as per his written statement' are that, sanction of various credit facilities by the Applicant Bank to the 1"t defendant are not within his knowledge and so he denied the sarne' The 7th defendant also denied execution of Guarantee Letters and Guarantee Agreements by himself and other defendants in favour of the Applicant Bank. The 7tr' defendant further denied the creation of mortgage by himself and other defendants over the application schedule properties in favour of the Applicant Bank towards security for the credit facilities sanctioned to the l"t defendant. He further denied the averments of the Applicant Bank in the oA with respect to interest, penal interest and outstanding amount liable by the defendants as false and baseless. Accordingly, Ttn defendant prayed for the dismissal of the oA.

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The Applicant Bank filed its Evidence Affidavit, duly sworn-in by Sri Mone Chandrasekhar, Authorized Representati as AW.1 and through him marked the :o A.75. The 7th defendant, duly sworn-in as DW.l vit but did not mark any documents on rri" ndi# 2 3^{sEP 1filt} 6. Heard Ld. Counsels for the Bank fendant. Ld. Counsel for the 7tt, defendant 3.a defendant did not choose to advance any

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OA.No.19/2022

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Now, the points for consideration are:

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i) whether the Applicant Bank has established its claim as made in the OA against the defendants?

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ii) To what relief.)

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Point No.(i):-

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Ld. counsel for the Applicant and the Ld. counsel for the 7tt defendant reiterated the versions of the Applicant and the 7th defendant respectively as stated supra.

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As stated supra, defendants No. l, 2, 4, S, 6, g & 9 remained ex-parte. The defendant No.3, even though entered appearance through his Counsel, did not choose to file his Written Statement.

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During the pendency of the oA, the Applicant Bank filed a Memo enclosing therewith a copy of the order dt.og.og.2o22 and order dt.o6.o6.2o24 passed by the Honble NCLT, Hyderabad Bench, Hyderabad in c.P.(lB).No-16o/7lHDB/2o22 and IA.No.3 of 3024 in c.P.(lB).No.160l7 IHDBl2022, between M/s. canara Bank Ltd., Narayanaguda, Hyderabad and M/s. Shresh Industries private Limited, Hyderabad, and stated that the Honble NCLT-II at Hyderabad was pleased to admit the application under CIRP on 09.09.2022 and thereafter as per order dt.o6.o6.2o24, passed by the Honble NCLT, the l"t defendant Company herein has been dissolved. In view of the above, no order is being passed by this Tribunal against the l"t defendant.

¶91

i 1. The 7tt' defendant, in his written statement, denied the oA claim by making bald statements that neither he nor the other defendants i.e., defendants No'2 to 9 execute any documents relating to Guarantee and creation of mortgage without any documentary evidence._p_eJ contra, the Applicant Bank J;;.; uy ,r,.

¶92

through Aw.r marked the loan ffi "ffiffij

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defendants as Exs.A.r to A.75, flr'S ffitWs.;X*[-a\rasreements and MoDs. The said evidence of the;frp{tca.rt ndb stood lrfu",,ed and un::i:"::: Bank, did not :1' choose 1': i:"".',,' to P::-* tY"mt'hDf'* the Applicant favourable

¶94

"r-'giri^8.*.rr\irr".^{h'W.l "[;elic?f}

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statements to substantiate frlt..jr,.r&pntentions. m-frl nce of AW.l '*&.i}:{pl

¶96

OA.No.19/2022

¶97

and the recitals in Exs.A.1 to A.75 amply prove the claim of the Applicant Bank against defendants No.2 to 9. So, I hold that, the Applicant Bank has established its claim against the defendants No.2 to 9 as made in the OA. Accordingly, this point is answered in favour of the Applicant Bank.

¶98

Point No.liil:-

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In the result, the present Original Application is allowed with costs as under:-

¶100

since the 1.t defendant company herein has been dissolved as per the orders of the Honble NCLT, Hyderabad, no orders are being passed by this Tribunal against the 1"t defendant;

¶101

ii) The defendants No.2 to 9 are jointly and severally liable to pay to the Applicant Bank a total sum of Rs.25,22,94,832.17ps., with future interest as under:-

¶102

a) a sum of Rs.71,37,858.50ps., towards the outstanding under Vehicle Loan account, with future interest @ 9.go/o p.a., from 01.01.2022 till the date of full paymentf realization;

¶103

b) a sum of Rs.9,83,54,171.7lps., towards the outstanding under Cash Credit account;

¶104

c) a sum of Rs.8,55,96,7o9.62ps., towards the outstanding under Cash Credit account;

¶105

d) a sum of Rs.2,81,54,OO4.62ps., towards the outstanding under WCTL account with future interest @ ll.650/o p.a., from 01.01.2022 till the date of full paymentf realization;

¶106

e) a sum of Rs.17,55,779.62ps., towards the outstanding under FITL account with future interest @^{ll.650/op.a., from 01.01.2022} till the date of fuli payment/

¶107

a sum of Rs.47 e outstanding under FITL account ,^from 01.01.2022 j'.i tilr the date of *ttry-.Trl.t,fFr,fiffl c rr t'Lr lllll : h.,

¶108

c rr t'Lr lllll
\ i-*' * h.,
',.Yi.4- f-$li^i

¶109

OA.No.19/2022

¶110

s) a sum of Rs.1,69,I5,435.86ps., towards the outstanding under WCDL account, with future interest @ 9.650/o p.o., from 01.01.2022 till the date of full payment/realization;

¶111

h) a sum of Rs.96,41,695.62ps., towards the outstanding under Covid FITL account, with future interest @ lO.Syo p.a., from 01.01.2022 till the date of full payment/realization.

¶112

iii) The Applicant Bank is entitled to proceed against the mortgaged immovable properties, which are described in application schedules,,A,, to "G", belonging to defendants No.3, 6, 7 , 2 & 4, towards rearization of the debt;

¶113

ir) The Applicant Bank is also entitled to proceed against the person and properties of defendants No.2 to 9 towards realization of the debt;

¶114

v) The Appticant Bank is entitled to the costs of the oA, which include Advocate Fee as prevailing in the State;

¶115

13' The Applicant Bank shall file costs Memo within two weeks from the date of

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this order.

¶117

Issue Recovery Certificate accordingly.

¶118

communicate a copy of this order to the parties concerned.

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(actated to the Priuate seletaty,^lrgnscribed bg him, corrected, signed and pronounced bg me in the open court on this the 23d dag of September, i024).

¶120

,i It v^'r ,i!: ,/7 ft ffi2lSEPrSTr == :a
i"! 'Wr*l@ t j. l-I

¶121

sd/(G. coPrcHANDl Presiding Officer

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TBUE COPY
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Canara Bank v. M/S. Shresht Industries Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Canara Bank v. M/S. Shresht Industries Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

Coram

Case details

All orders in this case

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