Allowed

Canara Bank v. Ms Armaan Travels

DRT21 Oct 2024OA/64/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed an application under Section 19 of the RDDBFI Act, 1993, filed by Canara Bank against a proprietorship firm and its proprietor for recovery of debt. The Tribunal found the defendants jointly and severally liable for an outstanding amount of Rs. 29,95,386.00.

What did the court decide?

Issue of Recovery Certificate for Rs. 29,95,386.00 plus interest and costs. Charge kept on hypothecated properties.

Canara Bank versus Ms Armaan Travels — Consumer Protection | DRT (2024)

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OA 642024/oRT_Guwahail

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IN THE DEBTS RECOVERY^{TRIBUNAL,GUWAHATI}

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(North Eastern Region)

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(Tribunal of Assam, Nagaland, Meghalaya^{Manipur, I\rizoram, Arunachal PradeshE Tripura)}

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Bofore Sh?i shiv sharan Dubov. Presidino officel

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O.A. No. 64/2024

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ln the matter of -

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CANARA BANK North Lakhimpur Branch, Jail Road. Ward No.8, North Lakhimpur, Dist LakhimPur, Pin-787001, Assam.

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Applicant

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Vs.

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1, M/S ARMAAN TRAVELS

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A Proprietorship firm

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N. T. Road, Ward No.14

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P.O.- Khelmati, District- Lakhimpur,

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North Lakhimpur-78703'1, Assam

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SRI PROMOD KUMAR JAISWAL

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Proprietor of M/s Armaan Travels

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Son of Anirudh Prasad Jaiswal.

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Ward No.14, Khelmati, Opposite Hanuman Mandir,

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P.O.- Khelmati, District- Lakhimpur, North Lakhimpur-787031, Assam

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Defendants

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Presence of the Counsel^:

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For the Applicant : Mr. Manoj Kumar Roy, Advocate

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For the Defendants : Defendant No.^'l appeared in^person (Right to file WS cum EA closed)

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Oated .2111Ot2024

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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 Financial lnstitutions^{Act,1993filed bytheCANAMBANK} North Lakhimpur Branch, Jail Road, Ward No.8,^{North Lakhimpur,Dist Lakhimpur,} Pin-787001, Assam, with a^prayer to issue Recovery Certificate for the sum of R3. 29,95,386.00^(Rupees Twonty-Nine Lacs Ninety-Fivo Thousand Three Hundred Eighty€ix) only as on 31.01.2024 against the defendants with^pendentelite and future interest at contractual rate till realization, along with cost and other relief.

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shrr-[al^"]dr" al. l o, LL1 I Presding Olicer v DRT. Guweheti

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O A. 64/2024loRT-Guwahalr

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

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The defendant no. 2 is the proprietor of the defendant no. I firm and engaged in the

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business of Tra\€l agency and mobile accessories etc.

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The Oefendant no. 2 as the^proprietor of defendant no. 1 firm had approached the Applicant Bank and applied for financial assistance for ib^Travel Agency business by submitting a Loan application date^{'11.06.2014.The applicantbank after considering the} sail application vide Sanction Memorandum dated^{1'1.06.2014,sanclioneda cash credit} limit of Rs.2.00 Lacs under CGTMSE scheme with interest charged at^10.55%per annum calculated on daily^produc{ at monthly rest.^{The cash sedit limitwas repayable on demand.} The said Sanclion Memorandum was duly accepted by the Defendant no.2, thereby agreeing to all the terms and conditions contained^{therein.Further,the defendantno.2} being the^proprietor of the defendant^{no.1 firmhad also signeda Request for Overdrafr} Facilities dated 11.06.20'14, thereby agreeing to the terms and conditions contained therein.

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ln connection with the sanclion of the cash credit facility of Rs. 2.00 Lacs, sancljoned by the Applicant Bank and availed of^{by the Defendants,} a Cash Credit Agreement dated^'11.06.2014 has been signed and executed^by the^{Defendant no.2} as^the proprietor of the defendant no.1 firm in favor of the Applicant Bank as security for repayment of the loan facili9, thereby agreeing to all the terms and conditions laid down in the said Agreement and also hypothecated the stocks^{of computer, mobile accessories etc.} (more specifically described in schedule A of the OA) in favor of the Applicant Bank. Further, the defendant had also signed and executed a Letter of Undetuking^{re: Loans/} Advances dated 1'1.06.2014 and^pronote dated 11.06.2014, thereby^promising to^pay Applicant Bank ihe entire loan amount on demand.

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The Defendant no. 2 as the^proprietor ot the defendant no.1 lirm had again approached the applicant Bank vide Loan application dated 24.06.2015 for renewal and enhancement of the cash credit facility and after^{consideringthe said application, the} Applicant Bank vide Sanction Memorandum dated 24.06.2015^{had renewed and enhanced} the existing cash credit facility of Rs. 2.00 Lacs to Rs.^7.00 Lacs^under CGTMSE scheme with interest @ 10.55%^per annum compounded monthly subjec{ to change from time to

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time as per Banks guidelines. The Defendant No.2 had signed on the said Sanction Memorandum, thereby agreeing to the terms and condition laid down therein. Further. the Defendant no, 2 as the proprietor of the defendant no:1 firm had also signed and executed a Supplemental Agreement dated 24.06.2015 thereby agreeing to all the terms and conditions laid down in the said Agreement and also all the provisions contained in the principal agreement dated '11.06.2014 shall apply for the purpose of security conferred by this agreement as if the property / assets hypothecated under these presents has been already incorporated in the principal agreement and the borrower hereby confirms in all respecls the aforesaid principal agreement as modified and enlarged by these presents and also the assets mentioned therein shall b€ available as security for the creased limits mntemplated under this supplement agreement, also signed and executed a Letter of Renewal dated 24.06.2015, Pronot dated 24.06.2015 and Link Letter dated 24.06.201S, thereby confirming the renewal and enhancement of the existing credit facility and execution of loan pape6/ documents as mentioned therein.

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The Oefendant no. 2 as the proprietor of the defendant no.1 firm had again approached the applicant Bank vide Loan application dated 15.07.2016 for renewal and enhancement of the cash credit, facility and after mnsidering the said application, the Applicant Bank vide Sanction Memorandum dated 15.07.2016 had renewed and enhanced the existing cash credit facility of Rs. 7.00 Lacs to Rs. 15.00 Lacs under CGTMSE scheme with interest^'10.10% per annum compounded monthly subject to change ftom time to time as per Banks guidelines. The Defendant No. 2 being the proprietor of the defendant no. 1 firm had signed on the said Sanction Memorandum, thereby agreeing to the terms and condition laid down therein. Further, the Defendant no. 2 as the proprietor of the defendant no.1 lirm had also signed and executed a Supplemental Agreement dated 15.07.2016 thereby agreeing to all the terms and conditions laid down in the said Agreement and also all th6 provisions contained in the principal agreement dated^.11.06.2014 shall apply for the purpose of security conferred by this agreement as if the properg/assets hypothecated under these presenls has been already incorporated in the principal agreement and the bonower hereby confirms in all respects the aforesaid pdncipal agreement as modilied and enlarged by these presents and also the assets mentioned therein shall be available as

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security for lhe increased limib contemplated under this supplement agreement, also signed and executed a Letter of Renewal dated 15.07.2016,^pronote dated^.t5.07.2016 and Link Letter dated 15.07.2016, thereby confirming the renewel and enhancement of the existing credit facility and execution of loan paperv documenb as mentioned therein.

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The Defendant no. 2 as the proprietor of the defendant no.1 firm had again approached the appticant Bank vide Loan application dated 15.07.2017 for renewal and enhancement of the cash credit facility and afrer mnsidering the said application, the Applicant Bank vide Sanction Memorandum dated 15.07.2017 had renewed and enhanced the existing cash credit facility of Rs.^'15.00 Lacs to Rs. 22.00 Lacs under CGTMSE scheme with interest @'10.70% per annum compounded monthly subiecl to change from time to time as per Banks guidelines. The Oefendant No. 2 being the proprietor of the dafendant no. 1 firm had signed on the said Sanction Memorandum, thereby agreeing to the terms and mndition laid down therein. Further, the Oefendant no. 2 as the proprietor of the defendant no.1 firm had also signed and executed a Supplemental Agreement dated 15.07.2017 thereby agreeing to all the terms and conditions laid down in the said Agreement and also all the provisions contained in the principal agreement dated 1'1.06.2014 shall apply for the purpose of security confened by this agreement as if the propedy / assets hypothecated under these presents has been already incorporated in the principal agreernent and the bonower hereby confirms in all respecls the aforesaid principal agreement as modified and enlarged by these presents and also the assets mentioned therein shall be available as security for the increased limits contemplated under this supplement agreement, also signed and executed a Letter of Renewal dated 15.07.2017, Pronote dated 15.07.2017 and Link Letter dated 15.07.2017, thereby confirming the rene\flal and enhancement of the existing credit facility and execution of loan papers/documents as mentioned therein.

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The Defendant no. 2 had again approached the applicant Bank vide Loan application dated^'15.07.2019 for renewal of the cash credit facility and after considering the sail application, the Applicant Bank vide Sanclion Memorandum dated 15.07.2019 had renewed the existing cash credit facility of Rs. 22.00 Lacs under CGTMSE scheme with interest @ 10.90% per annum compounded monthly subjecl to change from time to time as

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#*dsnai

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per Banks guidelines. The Defendant No. 2 had signed on the said Sanction Memorandum, thereby agreeing to the terms and condition laid down therein. Further, the Oefendant no. 2 had also signed and executed a Letter of Renewal dated 15.07.2019 thereby confirming the renewal of the existing credit facility.

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Thereafter during the Covid 1g pandemic, prs.approved loan was offered to the defendants vide letter dated 16.06.2020 and the defendant no.2 acceptad that offer and accodingly the applicant bank vide Sanction Memorandum dated 16.06.2020, had sanctioned Rs.4.39 Lacs to the defendant under Guaranteed Emergency Credit Line with inlerest charged 7.50% per annum with monthly rests. The Term Loan was to be repaid in 48 Monthly installment of Rs. 13,656.00. The Defendant no.2 had signed on the said Sanclion Memorandum thereby agreeing to all the terms and conditions contained therein. Thereafter the defendant no.2 had also signed and executed an Agre€ment cum Deed of Hypothecation dated 16.06.2020 and Pronote dated 16.06.2020 as security for repayment of the loan and lhereby agreeing to all the terms and conditions contained therein in favour of the applicant 8ank.

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The Defendant no. 2 as the^proprietor of the defendant no.l firm had again approached the applicanl Bank vide Loan application dated 30.11.2021 for renewal of the cash credit facility and affer considering the said application, the Applicant Bank vide Sanction Memorandum dated 30.11.202'l had renewed the existing cash credit facility of Rs. 22.00 Lacs under CGTMSE scheme with interest @9.10% per annum compounded monthly subject to change from time to time as per Banks guidelines. The Defendant No. 2 had signed on the said Sanc{ion Memorandum, thereby agreeing to the terms and conditon laid down therein. Further, the Defendant no. 2 had also signed and executed a Letter of Renewal dated 30.'11.2021, thereby confirming the renewal of the existing credit facility and execution of loan paperv documents as mentioned therein.

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The Defendants had availed of the said loan facilities from the Applicant Bank, but have not repaid lhe interest in the cash credit account and the installments in the term loan account as per the terms and conditions as agreed upon with the Applicant 8ank, inspate of repeated demands and requests by the Applicant Bank. Thereafter, as the Defendants had failed to repay the overdue amount in the loan accounts, the Applicant Bank vide Oemand

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slirl&rar 2"i.," P,""io.g om3[^lc'24 I DRT. Guwahati

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O A 64/2024loRl-Guwahatr

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Letters dated 12.U.2023 and 03.05.2023 had demanded and requested the Oefendants to regularize the loan accounts by^paying the overdue amount in the loan accounts including the accrued interest thereon but the Defendants failed to respond to the said demands and request sven afrer receipt of the same. However, the defendants had signed and executed Acknowledgement of Debt and Security dated 15.07.2019, 0'l..09.2021 and 20.01.2022 thereby confirming and ackno$/ledging the availing of the credit^{facilily from} the applicant bank.

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The Statements of Account maintained by the Applicant Bank in the usual and ordinary course of business shows that there is an outstanding balance of^Rs. 27,13,905.62 in the cash credit Account^(A,/c No. 424826100004) as on 31.01.2024 and an^outstanding balance of Rs. 2,84,484.38 in the Term Loan Account^(A/c No. 4248755000038) as on 31.0'1.2024 and afier deduclion of the charged^penal interest ltu. 2,84,484,38 - Rs. 3004.00 (Penal lnterest)), the amount @mes to Rs. 2,81,480.38. The account was classified as N.P.A. on 31.03.2023 and the total outstranding in both the loan accounts comes to Rs. 27 ,13p05.62^(CC)+ Rs. 2,81,480.38^(GECL) = Rs. 29,95,386.00 and the Defendants are legally bound and^jointly and severally liable to repay the said amount to the Applicant Bank with^pendentelite interest at contraclual rates with cost and charges till realization.

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The applicant bank thus became constrained to file the^pres€nt Original Application for the recovery of Rs. 29,95,3E6.00 (Rupoo3 Twenty-Nine Laca Ninety-Five Thou3and Thrse Hundrod Eighty-Six) only as on 31.0'1.2024 along with interest and cost of the application.

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After filing of the OA the Tribunal issued notices upon the defendants through registered post and the applicant bank flled service report on 27.03.2024 and brought on record the^postal receipts along with track consignment report. Mr. Promod Kumar Jaiswal (defendant No.2) who is the^proprietor of defendant No.1 have appeared in person on the same day i.e. on 27.03.2024 and submitted that he is not able to pay the outstanding balance amounl as his business is closed. Thereafter the matter was listed on saveral times, but written statement cum evidence on affidavit has not filed by the defendants. Hence, their right of the file written statement cum evidence on

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Presrding OfiiAri 0RT Guwahali

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affidavit was closed on 29.05.2024. Thereafrer the matter was posted for hearing on behaf of the applicant bank.

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Supporting the claim of the applicant bank Sri Ranjan Duwarah, Senior Manager of the Applicant Bank has filed evidence on afiidavit coupled with the security documents marked as Exhibit AW-'l to AW42, supporting the ctaim 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 aftirmed on oath the execution of th6 security and other documents by the defendants and also execution of their own documents relied upon, which 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 flled 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 iointly and severally liable to pay to the applicant bank the claim made in the Original Application. The loan was obtained and documents have been executed on 11.06.2014, 24.06.20'15, 15.07.2010, 15.07.2017, 15.07.2019, 16.06.2020 &30.11.2021. Ths account became NPA on 31.03.2023 and the OA has been filed on 13.02.2024. Hence, the OA is filed wett within the period of limitation and this Tribunal having a^jurisdiction to adjudicate the Original Application.

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Considering the unchallenged/ unrebutted version of Sri Ranjan Duwarah, the applicant'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 lhe Recovery Certificate as prayed for.

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ln the result, ihe present Original Application No. 64 of 2024 is allowed with cost as under :-

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i) The defendants No. I & 2 are jointly and severa y tiabte to pay to the applicant

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bank a sum of R3. 29,95,386.00 (Rupoes Twsnty-Nine Laca Ninety-Fivo

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Thousand Thres Hundrod Eighty-Six) only with pendentelite and future

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*,ka"A

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interesr @jo.,s%per annum witl mon*rry rests r,";;;:;; il;: ,r," ",

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full paymenurealization and also cost of the application.

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ii) The charge of the ce(aficated amount be kept alive on hypothecated properties,

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as described in Schedule-A of the OA till the amount is realized in full.

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iiD The appricant bank is entilred to proceed againsr the secured items towards recovery of the debts.

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iv) The applicant bank is also entifled to proceed against the personat assets and properties of the defendants towards recovery of the dues.

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v) The applicant bank is entifled to the costs of the O.A. which includes the advocate fees of the applicant bank. Applicant js directed to file the cost memo within 2 weeks from today.

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vi) lssue Recovery Certificate accordingly for a sum Rs. 29,95,3g6.00 (Rupsos Twenty-Nine Lacs Ninety-Five Thousand Three Hundrod Eighty-Six) only in favour of the applicant bank against the defendants No.^.1 & 2.

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vii) Communicate copy of this order to the concerned parties.

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This order is dictated and corrected by the undersigned.

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Judgment dated 21st October 2024, signed and pronounced in the Tribunal

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today under my signature.

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Copy of the JudgmenuFinal Order be uploaded in the Tribunal,s Website and file

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be consigned to Record Room.

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d^:,afu^o^2"L. (Shiv Sharan f,[J9i21 tl v Presiding Officer ORT, Guwahati.

Canara Bank v. Ms Armaan Travels

Case brief

What is this about?

What did the court decide?

Canara Bank v. Ms Armaan Travels

Case brief

What is this about?

What did the court decide?

What the court decided

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