Allowed

Uco Bank v. M/S Deep Machinery Works and Another

DRT6 Feb 2024OA/266/2023

Case brief

AI extract

What is this about?

The DRT allowed an application under Section 19 RDBFI Act for recovery of Rs.25.94 Lacs against M/s Deep Machinery Works and its proprietor. The Tribunal granted a uniform simple interest rate of 10% p.a. and directed the issuance of a Recovery Certificate, allowing supplementary recovery from personal assets if hypothecated property proceeds are insufficient.

What did the court decide?

Recovery of Rs.25,93,629.79p plus simple interest @10.00%p.a. jointly and severally, with Recovery Certificate issued.

Uco Bank versus M/S Deep Machinery Works and Another — Banking and Recovery | DRT (2024)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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ORIGINAL APPLICATION NO.266/2023

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PRESIDED OVER BY MRIDULESH KUMAR SINGH

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DATE OF INSTITUTION: 24.02.2023

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DATE OF DECISION: 06.02.2024

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UCO Bank, a body corporate, constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970, having its Head Office at 10, Brabourn road, Kolkata and its branches throughout India and amongst other branches having a branch office at Malhar Road, Ludhiana, through its Constituted Attorney, Ms. Sakshi Manro, Branch Manager, UCO Bank, Malhar Road branch, Ludhiana and who is also the principal officer of the plaintiff/applicant bank

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…….Applicant

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Versus

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M/s Deep Machinery Works, through its Sole Proprietor, Sh. Krishan Gopal S/o Sh. Pyara Lal, B-32-463/1, New Lajpat Nagar, Ludhiana

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Sh. Krishan Gopal S/o Sh. Pyara Lal, Sole Proprietor M/s Deep Machinery works, B-32-463/1, New Lajpat Nagar, Ludhiana

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IInd Address : 1164, Civil Lines, Rajpura Road, Ludhiana

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………Defendants

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Advocates:

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Argued by Sh. Ashok Verma, counsel proxy for Sh. Varun Verma, 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 under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, against the defendants for recovery of Rs.25,93,629.79p (Rupees Twenty Five Lacs Ninety Three Thousand Six Hundred Twenty Nine and Seventy Nine Paisa only). The Original Application has been filed through Ms. Sakshi Manro, Branch Manager

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of the applicant bank, who is competent to institute the Original Application vide Circular of the bank dated 20.07.2012, 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 sole proprietor defendant no.2 had approached the applicant bank for the grant of Cash Credit Limit of Rs.24.00 Lacs under CGTMSE scheme and later for Working capital term loan of Rs.4.70 Lacs under GECL scheme vide Loan Applications dated 05.07.2018 and 10.06.2020, which are Annexures A2 and A8 to this OA.

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The applicant Bank sanctioned the Cash Credit Limit of Rs.24.00 Lacs under CGTMSE scheme and Working capital term loan of Rs.4.70 Lacs under GECL scheme vide Sanction Letters dated 24.07.2018 and 10.06.2020, which are Annexures A3 and A9 to this OA; and the terms and conditions were duly accepted by the defendants.

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Defendant no.1 through its sole proprietor defendant no.2 had hypothecated its movable properties i.e. Stock of hosiery goods including raw material, semi-finished and finished goods, machinery and all other current assets of the firm at present and to be added in future during the currency of bank advance vide Hypothecation Agreement dated 26.07.2018, which is Annexure A7 to this OA. Documents executed: - D.P. Note, Letter of Waiver and Letter of Continuity all dated 26.07.2018, which are Annexures A4 to A6 to this OA; D.P. note, Letter of waiver, Agreement relating to term loan and Composite deed of Hypothecation all dated 10.07.2020, which are Annexures A10 to A13 to this OA; Letter of acknowledgement of debt dated 07.04.2021, which is Annexure A14 to this OA and Certified Statements of accounts, which are Annexures A15 and A16 to this OA. 5. 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.25,93,629.79p, which is recoverable and the defendants were served recall notices but they did not repay the outstanding

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amount, therefore, the applicant bank requested to accept the application and to issue Recovery Certificate accordingly.

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The defendants were served notices to appear before this Tribunal. Defendant no.2 appeared in-person but later due to nonappearance, the defendants were proceeded ex-parte on 21.12.2023. 7. In support of the OA, affidavit of Ms. Sakshi Manro, Branch Manager, UCO Bank has been filed.

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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 A16 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.25,93,629.79p (Rupees Twenty Five Lacs Ninety Three Thousand Six Hundred Twenty Nine and Seventy Nine 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 account.

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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 @11.05%p.a. plus @2%p.a. penal interest with monthly rests in the loan accounts from 11.02.2023 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 instant case including nature of the mortgaged property, undertaking of the defendant, quantum of loan and prevalent market rates of

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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 @10.00%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. 11. In the result, the application is allowed declaring that the defendants are liable to pay to the applicant a total sum of Rs.25,93,629.79p (Rupees Twenty Five Lacs Ninety Three Thousand Six Hundred Twenty Nine and Seventy Nine Paisa only) jointly and severally, with costs, current and future simple interest @10.00%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. 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 19.02.2024. 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: 06.02.2024

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

Uco Bank v. M/S Deep Machinery Works and Another

Case brief

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Uco Bank v. M/S Deep Machinery Works and Another

Case brief

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