Allowed

Canara Bank v. Messrs Tanmay Fabrics and Anr.

DRT16 Jan 2024OA/537/2022

Case brief

AI extract

What is this about?

The Tribunal allowed the bank's application for recovery of Rs.1.05 crore against the sole proprietor and firm after finding no repayment of loans. It granted uniform simple interest at 7.65% p.a. across all accounts and authorized recovery via hypothecated properties.

What did the court decide?

Declaration of liability to pay Rs.1,05,94,808.67 with costs and simple interest at 7.65% p.a.; entitlement to recover via sale of hypothecated/personal assets; issuance of Recovery Certificate.

Canara Bank versus Messrs Tanmay Fabrics and Anr. — Company and Corporate | DRT (2024)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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ORIGINAL APPLICATION NO.537/2022

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PRESIDED OVER BY MRIDULESH KUMAR SINGH

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DATE OF INSTITUTION: 10.12.2021

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DATE OF DECISION: 16.01.2024

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Canara Bank, a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act V of 1970, having its Registered Head Office at J.C. Road, Bangalore, having its Branches all over India and inter-alia a Branch Office at Bharat Nagar Chowk, Rahon Road, Ludhiana, Punjab through its duly constituted attorney, Mrs. Kunalika Gupta, who is working as Officer of the Branch at Bharat Nagar Chowk, Ludhiana, Punjab

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……..Applicant

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Versus

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M/s Tanmay Fabrics, H.No.8093, Street No.1, New Shastri Nagar, Basti Jodhewal, Ludhiana, Punjab through its Sole proprietor, Sh. Prateek Jain

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Sh. Prateek Jain S/o Late Sh. Parveen Jain, R/o H.No.8093, Street No.1, New Shastri Nagar, Basti Jodhewal, Ludhiana, Punjab

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………Defendants

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Advocates:

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Argued by Sh. Atul Mahajan, 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.1,05,94,808.67p (Rupees One Crore Five Lacs Ninety Four Thousand Eight Hundred Eight and Sixty Seven Paisa only). The Original Application has been filed through Mrs. Kunalika Gupta, Officer of the applicant bank, who is competent to institute the Original

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Application vide General Power of Attorney dated 18.10.2016, 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 from time to time for the grant of credit facilities under CGTMSE scheme i.e. OCC Limit of Rs.10.00 Lacs and further for its several enhancements/renewals till the maximum limit of Rs.45.00 Lacs, Term Loan-I of Rs.9.00 Lacs, Term Loan-II of Rs.21.00 Lacs, Term Loan-III of Rs.20.00 Lacs, Term Loan-IV of Rs.8.73 Lacs and Working capital Demand Loan of Rs.4.50 Lacs vide Loan Applications dated 26.10.2015, 01.02.2016, 26.06.2016, 18.07.2016, 23.03.2017, 03.04.2018 and 27.03.2019, which are Annexures A2, A14, A23, A30, A37, A57 and A64 to this OA.

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The applicant Bank sanctioned the credit facilities under CGTMSE scheme i.e. OCC Limit of Rs.10.00 Lacs and further enhanced/renewed it several times till the maximum limit of Rs.45.00 Lacs and also sanctioned Term Loan-I of Rs.9.00 Lacs, Term Loan-II of Rs.21.00 Lacs, Term Loan-III of Rs.20.00 Lacs, Term Loan-IV of Rs.8.73 Lacs and Working Capital Demand loan of Rs.4.50 Lacs vide Sanction Memorandum/Renewal letters dated 29.10.2015, 03.02.2016, 28.06.2016, 19.07.2016, 24.03.2017, 04.09.2017, 03.04.2018, 30.03.2019 and 31.08.2020, which are Annexures A3, A15, A24, A31, A38, A52, A58, A60, A65, A66, A69 and A75 to this OA and the terms and conditions were duly accepted by the defendants.

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Later on, due to COVID-19 Pandemic, the applicant bank converted the accumulated interest into two COVID Funded Interest Term loans i.e. CFITL-I of Rs.2,59,371.00 and CFITL-II of Rs.4.80 Lacs.

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Defendants had hypothecated their movable properties detailed as:- Stocks and book debts, fabrics, finished goods like blankets, Plant and machineries like Raising machine with all allied accessories, Tubular machine with all allied resources, Circular knitting machine,

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One Gen Set 20 KV III Phase with w/c Engine and Diesel Genset installed at H.No.8093, Street No.1, New Shastri Nagar, Basti Jodhewal, Ludhiana, Punjab vide Cash Credit Agreement dated 31.10.2015, Deeds of Hypothecation dated 03.02.2016, 26.07.2016, 04.09.2017 and 31.08.2020 and Common hypothecation agreements dated 24.03.2017 and 03.04.2018, which are Annexures A11, A17, A34, A42, A53, A63 and A79 to this OA.

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Documents executed:- Account opening form, Specimen signature cards, Letter of request for overdraft facility, Pronote in OCC Limit, Agreement re: collateral security and Letter of proprietorship all dated 31.10.2015, which are Annexures A4, A5 and A9 to A10, A12 and A13 to this OA; Central sales tax certificate of registration and Registration certificate issued under the Punjab VAT Act, 2005 both dated 10.03.2016, which are Annexures A6 and A7 to this OA; Affidavit executed by defendant dated 03.02.2013, which is Annexure A8 to this OA; Letter of proprietorship, Letter of undertaking, Agreement re: collateral security and Letter of undertaking/consent all dated 03.02.2016, which are Annexures A16 and A18 to A20 to this OA; Invoice of M/s National Engine Spares for purchase of diesel gen set dated 16.03.2016, which is Annexure A21 to this OA; Invoice of M/s Nirmal Sales India for the purchase of circular knitting machine dated 17.03.2016, which is Annexure A22 to this OA; Link letter in respect of enhancement, Pronote, Supplemental agreement, Declaration from borrower and Letter of undertaking/consent all dated 28.06.2016, which are Annexure A25 to A29 to this OA; Specimen signature card, Letter of partnership and Letter of undertaking all dated 26.07.2016, which are Annexures A32, A33 and A35 to this OA; Letter containing particulars of hypothecated assets dated 17.08.2016, which is Annexure A36 to this OA; Link letters in respect of enhancement, Pronote, Letter of undertaking, Agreement, Irrevocable mandate for deduction from account, Letter of disclosure of information, Declaration from borrower, Letter, Undertaking letter,

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Enclosure IV-Clauses in documentation, Appendix-B letter of undertaking/consent all dated 24.03.2017, which are Annexures A39 to A41 and A43 to A51 to this OA; Pronote and Letter of undertaking both dated 04.09.2017, which are Annexures A54 and A55 to this OA; Letter containing particulars of hypothecated assets dated 30.09.2017, which is Annexure A56 to this OA; Request for overdraft facilities, Link letter in respect of enhancement, Pronote all dated 03.04.2018, which are Annexures A59, A61 and A62 to this OA; Unit visit report dated 14.01.2019, which is Annexure A67 to this OA; Letter of proprietorship dated 30.03.2019, which is Annexure A68 to this OA; Draft letter of undertaking, Debtor-creditor agreement, Debtrestructuring agreement, Certificate of loan papers obtained and Letter evidencing execution of documents all dated 21.09.2019, which are Annexures A70 to A74 to this OA; Letter of proprietorship, Take delivery letter to DPN, Pronote and Enclosure IV Clauses to be incorporate all dated 31.08.2020, which are Annexures A76 to A78 and A80 to this OA; Acknowledgments of debt and security dated 24.03.2017, 03.04.2018, 02.02.2019, 30.03.2019, 15.07.2019 and 21.01.2020, which are Annexures A81 to A86 to this OA; Demand notice u/s 13(2) of the SARFAESI Act dated 31.08.2021, which is Annexure A87 to this OA and Statements of accounts, which are Annexures A88 to A95 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.1,05,94,808.67p, 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 20.10.2023.

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In support of the OA, affidavit of Mrs. Kunalika Gupta, Officer, Canara Bank h as been filed.

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Heard ex-parte arguments and perused record. 9. It was argued by learned 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 A95 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.1,05,94,808.67p (Rupees One Crore Five Lacs Ninety Four Thousand Eight Hundred Eight and Sixty Seven 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 @9.80%p.a. in OCC Limit, @11.90%p.a. in Term Loan-I, @14.25%p.a. in Term Loan-II, @9.50%p.a. in Term Loan-III, @9.25%p.a. in Term Loan-IV, @7.65%p.a. in Term Loan-V, @9.75%p.a. in CFITL-I and @14.35%p.a. in CFITL-II; compounded monthly along with @2%p.a. penal interest in all the loan accounts, from 01.12.2021 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 interest which have gone drastically downhill in yester years, while

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exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant uniform simple interest @7.65%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.1,05,94,808.67p (Rupees One Crore Five Lacs Ninety Four Thousand Eight Hundred Eight and Sixty Seven Paisa only) jointly and severally, with costs, current and future simple interest @7.65%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 07.02.2024. 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: 16.01.2024 (MRIDULESH KUMAR SINGH) Presiding Officer, DRT-III, Chandigarh

Canara Bank v. Messrs Tanmay Fabrics and Anr.

Case brief

What is this about?

What did the court decide?

Canara Bank v. Messrs Tanmay Fabrics and Anr.

Case brief

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