Allowed

State Bank of India v. Messers Chhan Chhan Store

DRT23 Apr 2024OA/245/2023

Case brief

AI extract

What is this about?

An application under Section 19 of the RDBFI Act by State Bank of India for a Recovery Certificate against four respondents. The Tribunal found the documents established liability, dismissed the application, and issued a Recovery Certificate for the principal amount with interest.

What did the court decide?

Issuance of Recovery Certificate for Rs. 25,04,567.36 plus interest at 10.50% p.a. from 01.07.2023 until realization.

State Bank of India versus Messers Chhan Chhan Store — Contract and Commercial Disputes | DRT (2024)

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O A 2,t5poz3/ORI€uwrhati

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IN THE OEBTS RECOVERY TRIBUNAL, GUWAHATI

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(Nonh Eastern Region)

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(Tribunal of Assam. Nagatand. Meghataya, Manipur, Mizoram, Arunachal pradesh & Tnpura)

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O.A. No. 24sl2023

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ln the matlor of -

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Stato Bank of lndia, Stressed Assets Recovery Branch, Bamunimaidam, M. R. 0. Road, Guwahati-2i, District- Kamrup (M), Assam.

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.. Applicant

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Vs.

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M/s Chhan Chhan Store
Prop. Smti. Vanlalruati
Wife of V. L. Zama
Venglai, Champai, District Champhai,
Mizoram, Pin- 79632'l
2. Vanlalrua0
Wife of V. L. Zama
Prop M/s Chhan Chhan Store
Vengthlang Champai, District Champhai,
Mizoram, Pin- 79632'1
3. V. L, Zama
Son of Chhakchhuak Thangmura
Vengthlang, Champai, District Champai,
Mizoram, Pin- 796321
4. Pahlira
Son of K. Nghaklhuama
Khuangthing, District - Champai Mizoram,
Pin- 796320.

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Defenda nts

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Presence of the Counsel: For the Applicant Mr. K K Nandi, Ms. Rochoita Das, Ms. Susmita Dey, Advocates For the Defendants None (Ex-parle). Oated .2310412024

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SLrEk8^^8"t4"*"t0,^nok!,16)\ 0RT, Guw6hali'⁽

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O A 245l2O23UORT-cuwaha!

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JUDGMENT

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This is an application under section 19 of the Recovery of Debts Due to Banks and Financiar rnstitutions Aci, 1993 fired by the state Bank of rndia, srressed Assets Recovery Branch, Bamunimaidam, M.R.D.Road, Guwahati_2i, Oistrict_ Kamrup (M), Assam Guwahati_21, with a prayer to issue Recovery Certificate for lhe sum of R3' 25,04,967.36 (Rupees Twenty-Five Lakh3 Four Thourand Five Hundred Sixty-Sovsn and paiea Thirty€ix) only as on 30-06-2023 against the defendants with pendentelite interest at the rate of 10.50% per annum at monthly rest till realization, along with cost and other retief.

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A few facts giving rise to the present application are as under.

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The defendant no.1 is a proprietorship firm which dears in hardware materiars and the defendant no. 2 is the proprietor ofdefendant no. 1 firm. The defendant no. 'I availed various credit faci,ities from the applicant bank. The defendant nos. 3 and 4 are the guarantors in their personal capacities of the credit facilities availed by the defendant no.^,l from the applicant bank. The defendant no. 1 represented by its proprietor being defendanl no. 2 approached the appricant bank for financiar assistance for the purpose of its business by submitting an application dated 25.04.2016. The applicant bank upon consideration of the said apptication dated 25.04.2016 sanctioned cash credit facitity of Rs. 20,00,000.00 to the defendant no. I vide lstter of arrangement dated 29.04.2016. The terms and conditions of the arrang€ment letter dated 29.04.2016 was duty accepled by the defendants and as a tokon of accaptance of the same the defendant no. 2 as proprietor of the defendant no. I and defendant nos. 3 and 4 in their personal capacities have signed in the arrangement letter of having accepted the terms and conditions. lt was th6 terms and conditions of the arrangement letter that the effective rate of lnterest in the cash crudit account being 11.90% pq annum calculated on daily balance of the loan amounl at monthly rests.

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Defendant no.'l availed the above cash credit facilities from the aDDlicant

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aDDlicant st ergfrflq*F, Pesiding Oftcar I I 1 l oRT Guwahati' v

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oa 24r2o23/oRr-cuwehsri

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bank and the defendant no. 2 as proprietor of defendant no. t have executed following documents on 29.04.2016 :_

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(1)Agreement of Loan-cum-hypothecation dated 29.04.20.16

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The defendant no.^.l availed the cash credit facilities from the appticant bank and the defendant nos. 3 and 4 in their individual capacities stood as guarantoE of the credit facilities availed by the defendant no. 1 from tho applicant bank and have executed Guaranlee Agreement on 29.04.2016 by which they have agreed to the terms and conditions recited therein and have made themselves joinfly and severally liable for the entire outstanding in the loan account with inlerest to the applicant bank.

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The defendant no. 3 have executed Consent clause dated 29.04.2016 by which he gave consent to the applicant bank for disclosure by the applicant bank of all information and data relsting to him, regarding credit facilily granted by the bank and guaranteed by him and default, if any, committed by him.

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The defendant no.4 have executed Consent clause dated 29.04.20i6 by which he gave consent to the applicant bank for disclosure by the applicant bank of all information and data relating to him, regarding credit facility granted by the bank and guarantesd by him and default, if any, committed by him.

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Defendant no. I availed the cash credit facility from th6 applicant and as a security for repayment of the said loan amounl, defendant no. 3 has created equitabfe mortgage of land measuring 0. 15 Bigha (205.62 sq.m/ 2212.52 sq.ft) being plot no. 19, Survey no. 2 situaled at Vengthlang, Champal, Mizoram together with structures standing thereon by deposit of tifle deeds with the applicant bank on 29.04.2016. The defendant no. 3, deposited with the appticant bank tifle deeds such as Cerlificate of Land Settlemenl No. 3077021011258 of 2008, No objection Certificate dated 19.06.2013, Non Encumbrance Certificate dated 19.06,2013, Certificate of Land Valuation dated 19.06.2013, Revenue Receipt dated 18.02.2016, site plan. That the defendant no. 3 have deposited title deeds with the applicant bank with the intention to crsate an equitable mortgage in favour of the

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skt,t t-l^ua,.Qul* **to,n#,404Pt ( DRT. Gultahati

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O.A. 2.512023/DRI-Gurah.ri

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applicant bank on 29.04.20i6 and have executed confirmation letter dated 30.04.2016 by whjch he confirmed and admitted his intention to create equitable morlgage of the schedula A land in favour of the applicant bank as a security for repaymenl of loan availed by defendant no j. The property mortgaged/created charge by the defendant no. 3 with the applicant bank as a security for repayment of the housing loan availed by defendant no 1 is more specifically described in schedule A of the OA.

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The varuation of the mortgaged property as described in schedure A hereto was done by registered valuer of the applicant bank Thangmuansang cuite who has submitled his report dated 03.03.2023.

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The defendant no. 1 represented by ils proprietor being defendant no. 2 approached the applicant bank for renewal of the cash credit facility by submitting a letter dated 28.12.2018. The appticanl bank upon, consideration of the said tetter daled 28.'12.2019 renewed the cash credit facility at the then exisling timit of Rs. 20,00,000.00 and have sanctioned term loan of Rs. 2,7S,OOO.OO vide arrangement letter dated 17.01.2019. Though the appticant bank has sanctioned term loan of Rs. 2,75,000.00 to the defendant no. 1 but the same was nol avaited by the defendant no 1. The terms and conditions of the arrangement letter dated 17.01.20'19 was duly accepted by the defendant no.1 and as a token of acceptance of the same the defendant no. 2 as proprietor of defendant no t have signed in the arrangement letter of having accepted the te.ms and conditions. lt was the terms and conditions of the arrangement letter that the offective rate of interest in the cash credit account being 12.15oh p annum calculated on dally balance of the loan amount at monthly rests.

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Defendant no. 1 represented by its proprietor being defendant no.2 approached the applicant bank with a prayer for grant of demand loan and the applicant bank upon consk eration of the said prayer so made sanctioned demand loan (GECL) of R3. 4,00,000.00 vide arrangement letter dated 01.06.2020. The terms and conditions of the arrangement letter daled 01.06.2020 was-duly

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o.a 245l2o23,oRr-cur€hari

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accapted by the defendant no. 1 and as a token of acceptance of the same the defendant no. 2 as proprietor of defendant no. .l have signed in the arrangement letler of having accepted the terms and conditions. lt was the terms and conditions of the arrangement letter that the effective rate of interest in the demand loan account being 7.90% per annum calculated on daily balance of the loan amount at monthly rests. lt was also the terms and conditions of the sanction letter that the demand loan shal be repaid in 36 equated monthry instalments of Rs. ,r 1,2oo.oo each.

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The defendar no.l availed of the demand toan (GECL) from the applicant bank and the defendant no. 1 represented by its proprietor being defendant no. 2 have executsd th€ tollowing documents 01.06.2020 j

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(1) Supplemental Agreement of Loan-cum-hypothecation dated 01.06.2020

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The defendant no.^.l represented by its proprietor being defendant no. 2 approached the applicant bank with a prayer for renewal of the cash credit facility. The applicent bank upon consideration of the said prayer so made renewed the cash credit facility at the then existing limit of Rs. 2O,0O,OO0.OO vide arrangemenr letter dated 06j0.2021. The terms and conditions of the arrangement letter dated 06.10.2021 was duly accepted by the defendant no. 1 and as a token of acceptance of tha same the defendanl no. 2 as proprietor of defsndant no 1 and ths defendant no 3 in his individual capacity have signed in the arrangement letter of having accepted the terms and conditions. lt was lhe terms and conditions of the arrangement letter that the effective rate of interest in the cash credit account being 10.50% p€r annum calculated on daily balance of the loan amount at monthly rests.

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Th€ deferdanl no. 'l availed the renewed cash credit facility from the applicant bank and the defendant no.3 in his individual capacity stood as guarantor of the cash credit facility availed by the defendant no. 1 from the applicant bank and have executed Guarantee Agreement on 00.10.2021 by which he has agre€d to tho terms and conditiona recited therein and have made himself

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jointly and severally liable for the entire outstanding in the loan account with interast to th6 applicant bank.

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The defendant no. 1 represented by defendant no. 2 as its proprietor and defendant nos. 3 and 4 in their individual capacities executed revival letter on 20.04.2022 pertaining to the documents executed by them on 29.04.2016, 17.01.2019, 01 .06.2020 and 06.10.202'l in respect of the credit facilities availad by the defendant no. I from the applicant bank.

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The defendants had availed the loan facilities from the applicant bank but have not paid the outstanding amount as per terms and condition made with the applicant bank in spite of repeated demands and request by the applicant bank. As the loan account being the cash credit account of defendant no. 1 was running extremely irregular and due to non-payment of principal amount and interest, the said account was classified as a NPA on 28.9.2022. After the account became NPA the applicant bank issued notices for repayment of the due amount, the defendants have neither chosen for repayment of the remaining installments in the loan account nor approached to the applicant bank for settling the loan account.

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The applicant bank thus became mnstrained to file the^present Original Application for the recovery of Rs. 25,04,567.36^(Rupoo3 Twonty-Five Lakhs Four Thou3and Fivo tlundred Slxty€even end Paba Thlrty€lx) only as on 30-06-2023 along with interest and cost of the application.

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After liling of the OA the Tribunal i$ued notices upon^{the defendants through} registered^post and the applicant bank filsd service^{reporton '12.09.2023and brought} on record the^postal receipts along^with track^{consignment report which shows that} notices have been duly served upon the defendants^{No 1, 2 & 3 by name and notice} has not been served upon the defendant^{No 4. Thereafterthe Tribunal ordered paper} publication of notice upon the defendani No 4 and the applicant bank issued notice to the defendant No 4 on 28.09.2023^{through Paper Publication in two newspapers} 'The Aijwat Posf' end "Newslink".^{lt is obsen/edthat even after proper serviceof} ^amely notice upon the defendants No. 1,2 &^{3 and evenafler issuanceof notice thrqugh pEPer} ShrrP/o-t+-Q.},,*.,o"nor?Jloal\ [ DRT. Guwshati

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0.A. 245l2o23uoR1€uw.hari

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publjcation also upon the defendants No. 4 there was no representation on behalf of the defendants either by the counser or the person and hence rhe defendants were set ex-parte on 11.12.2023 and their right to fire written sratement cum evidence on aftidavit was closed and the matter was posted for hearing on behalf of the applicant bank.

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Supporting the daim of the applicant bank Sri Nijananda Badir, Chief Manager of the Applicant Bank has fled evidence on affidavit coupted with the secudty documenb marted as Exhibit A-1 to A-28, supporting the claim of the applicant bank.

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Heard the learned counsel for the applicant bank who prayed for issuance of Recovery Certificate against the defendants as per pleadings made in the Application, supported by evidence on affidavit of their witness who affirmed on oath the execution of the security and other documents by the defendants and also execution of lheir own documents relied upon, whicfi have been marked exhibits.

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Considering the facts and circumstances of the case, I am of the considered view that the documents filed by the applicant bank are supporting the ctaim of the applicant bank and establishing the liability of the defendants. lt is proved that the defendants are ioinuy and s€verally liable to pay to the applicant bank the claim made in the originar Apprication. The roan was obtained and documents have been executed on 29.04.2016,^{.17.0,t.2019,} O,t.06.2020 and 06.10.2021. Revivat Letter is dated 20.04.2022. The account b€came NpA on 2B.O}.2O2Z and the OA has been filed on 07.07.2023. Hence, the OA is fited w€ll within the period of timitation and this Tribunal having a jurisdiction to adiudicate the Originat Apptication.

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Considering the unrebutt€d version of by Sri Niiananda Badir, the appticant,s witness and all the documents marked as exhibits, including duly certified copy of the statement of account along with interest calculation sheet maintained by the applicant Bank in it's regular course of business, I hold that the applicant is entifled to get the Rocovery certificate as prayed fo,

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SIdn, do*^brl*, "."..n*3104['! DRT, Guwahali^I

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O.A 24t2o23rlDRr€Raharr

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ln the result, th6 prosent Original Application No. 245 of 2023 is allowed with cost as

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under :

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The defendants No. 1, 2, 3 & 4 are joinfly and severaly liabte to pay to the applicant bank a sum of R!. 25,0it,867.36 (Rupoes Twsnty_Fivo Lakhs Four Thouland Fivo Hundred Sixty-Soven and paisa Thirty€ix) only with pendentelite and future interest @10.50% p.a. with monthty rests from 01.07.2023 til the date of full paymenurealization and also cost of the application.

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ii) The charge of the cortiticated amount be kepl alive on mortgaged propedy i.e. all that piece and parcal of a ptot of land measuring 0.15 Bigha (205.62 sq.m/2212.S2 sq.ft) being plot no. 19, Survey no. 2 situated at Vengthlang, Champai, Mizoram and is bounded by North: Rochhuma,s site, South: Lalchungnunga,s site, East: setf-site (unreserved), West: Road, as described in Schedute_A of the OA till the amount ts realized in full.

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iiu

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The applicant bank is entifled to proceed against the secured items towards recovery of the debts.

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iv) The applicant bank is also entifled to proceed against the personal assets and properties of th€ d€tendants towards recovery of the dues.

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vi)

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The applicant b8nk is entiUed to the costs of the O.A. which includes the advocate fees of the applicant bank. Applicant is direcled to file the cost memo within 2 weeks from today.

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lssue Recovery C€rt'ficate accordingly for a sum Rs. 25,0it,S67.36 (Rupees TwentyFive Lakhs Four Thousand Five Hundred Sixg-Seven and pai3a Thlrty€lx) onty in favour of the applicant bank against lhe defendants No. 1,2,3&4.

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vii) Communicate copy of lhb order to the concemod parlies.

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This order is dictated aM conected by the undersigned.

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Judgment datrd 2g Aptil' 2024, signed and pronouncsd in the Tribunal today under

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my signaturB.

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Copy of the JudemenvFinal Order be uploaded in the Tribunal,s Websit€ and tite be consigned to Recod Room.

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Shi-,itrk)e^ Q.,h,.r t1l a4 lzu I U (Shiv Sharan Dubey)^I Prcsiding Ofticer DRT, Guwahati.

State Bank of India v. Messers Chhan Chhan Store

Case brief

What is this about?

What did the court decide?

State Bank of India v. Messers Chhan Chhan Store

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

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Case details

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