Allowed

State Bank of India v. Goodwin Automotive Private Limited

DRT6 Sept 2024OA/758/2023

Case brief

AI extract

What is this about?

The Tribunal allowed an application for recovery certificate. It revoked the bank's claim for certain charges and expenses lacking proof, holding them ineligible under Section 2A of the Banker's Books Evidence Act, 1891, while directing payment of the remaining dues with interest.

What did the court decide?

Directing defendants to pay specified sums jointly and severally with interest and authorizing the sale of properties.

State Bank of India versus Goodwin Automotive… — Contract and Commercial Disputes | DRT (2024)

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Fair order

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IN THE DEBTS RECOVERY TRIBUNAL – 1 AT ERNAKULAM

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DATED THIS 06^th DAY OF SEPTEMBER, 2024

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PRESENT: Su. WILLYAHM, B.Sc., M.L. [DISTRICT JUDGE - Retd] PRESIDING OFFICER

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OA No.758/2023

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Between

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State Bank of India, ARM Branch, 1^st Floor R. S. Building Opp. Maharajas College Ground Metro Pillar No.697, M. G. Road Ernakulam – 682 011 Represented by its Chief Manager

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----Applicant

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And

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M/s. Goodwin Automotive Private Limited, 1^st Floor Room No.38/39 B8 Akarsh Complex, Athanikkal West Hill, Calicut – 673 005

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Shaji K K S/o. Raghavan Geethalayam Eruvatty, Thalassery Kannur – 670 642

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OA 758/2023

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Rahna K. W/o. Shaji K K Rasmi, Sivapuram Malur, Eravatti Thalassery Kannur – 670 702

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----Defendants

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This Original application coming on 16.08.2024 for final hearing before me in the presence of Mr. Saju N. A., Advocate Counsel for the Applicant bank and Defendants 1 to 3 not being represented by their counsel and upon hearing arguments of learned counsel for the Applicant bank and upon perusing the material records, this Tribunal delivered the following:

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O R D E R

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The applicant bank has filed the instant memo ID No.11200/2024 dated 23.07.2024 seeking to issue Recovery Certificate pursuant to the Lok Adalath award dated 30.01.2024.

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The applicant bank has filed a default memo stating inter alia that the defendants have defaulted in payment of the amount as per the award of the Lok Adalath held on 30.01.2024. The OA was settled in Lok Adalath held at DRT-1 on 30.01.2024 and as per the terms of compromise, the defendants were obliged to remit a sum of Rs.60,00,000/- to the applicant bank in twenty installments. It was agreed that in the event of default of payment of installments, the defendants would have no objection to the issuance of Recovery Certificate for the entire amount claimed in the OA with interest and costs less such payments effected after the passing of the award. It is stated that the defendants have failed to remit the settled amount as per the said award and hence it is prayed to issue a Recovery Certificate as claimed in the OA.

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On perusal of records, it could be seen that as per the award, the defendants had to pay an amount of Rs.60,00,000/- to the applicant bank in twenty installments i.e. 1^st installment of Rs.10,000/- on 20.01.2024, 2^nd installment of Rs.50,000/- on or before 25.02.2024, 3^rd installment of Rs.2,00,000/- on or before 25.03.2024, 4^th to 9^th installments of Rs.1,50,000/- per month to be paid on 25^th day of each month from April,

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Page 2 of 5

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OA 758/2023

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2024 to September, 2024 and 10^th to 20^th installments of Rs.4,84,000/per month to be paid on 25^th day of each month from October, 2024 to July, 2025.

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As per the award, the defendants had to pay an amount of Rs.60,00,000/- to the applicant bank. It was made clear in the award that in the event of failure to pay the amount as aforesaid, the defendants shall forfeit the benefits of compromise and they shall have no objection for issuance of Recovery Certificate for the entire amount claimed in the OA with interest and costs, less payments effected subsequent to passing of the award, on filing of necessary application before the Tribunal intimating the instance of such default.

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According to the applicant bank, the defendants have failed to pay the installments as per the award dated 30.01.2024 and, therefore, it is prayed to issue a Recovery Certificate as claimed in the OA.

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The statement of account relating to WCTL Loan account. On the showing of the applicant bank itself as could be inferred from OA, the amount claimed as due under such account is inclusive of the sum of Rs.5,590/- (being other charges). It is the case of the applicant bank that the account became irregular and hence it was not debiting interest and penal interest in the loan accounts as per the guidelines issued by the Reserve Bank of India. But it has no case as to how is it entitled to claim the aforesaid charges added to the ledger balance to arrive at the amounts claimed as due under the OA as on 06.09.2023. It is not possible to understand as to what prevented the applicant bank from incorporating the expenses and charges by way of debit entries under such account after such account became non-performing asset. What was prevented by the Reserve Bank of India guidelines was only further debiting of interest and penal interest as rightly done by the applicant bank. Except claiming such charges and expenses, the applicant bank did not produce any cogent piece of evidence in respect of such claim. A mere statement by the applicant bank does not make it eligible to recover such charges and expenses from the defendants without producing sufficient proof for the same. Therefore, such charges and expenses cannot be construed to be taken as certified under Section 2A of the Banker’s Books Evidence Act, 1891. Therefore, the applicant bank is not entitled to recover the aforesaid amounts claimed by way of expenses and charges from the defendants.

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Page 3 of 5

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OA 758/2023

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The case and claim of the applicant as regards its entitlement to recover a sum of Rs.49,63,721.62 less the amount of Rs.5,590/- i.e. Rs.49,58,131.62 due under WCTL account; a sum of Rs.6,44,065/- due under GECL account and a sum of Rs.2,24,717/- due under FITL account with future interest from the defendants, jointly and severally.

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In the result, the Original Application is allowed directing defendants to pay to the applicant bank, jointly and severally, as per the following lines :

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“(i) A sum of Rs.49,58,131.62 (Rupees Forty Nine Lakhs Fifty Eight Thousand One Hundred Thirty One and Paise Sixty Two only) due under WCTL account with interest @12.75% per annum from 07.09.2023 till the date of realisation;

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(ii) A sum of Rs.6,44,065/- (Rupees Six Lakhs Forty Four Thousand Sixty Five only) due under GECL account with interest @9.25% per annum from 07.09.2023 till the date of realisation; and

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(iii) A sum of Rs.2,24,717/- (Rupees Two Lakhs Twenty Four Thousand Seven Hundred Seventeen only) due under FITL account with interest @17.25% per annum from 07.09.2023 till the date of realisation.”

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On failure to pay the above said debts to the Applicant Bank, the Applicant Bank is directed to bring the OA schedules ‘A & B’ properties, for sale to realize its dues and its proportionate costs.

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The Registry is directed to prepare DRC in terms of this final order. The Applicant Bank shall file memo of costs within 10 days from the date of this order. Registry is directed to communicate the copy of this order to both parties as provided in Rule 16 of the Debts Recovery Tribunal (Procedure) Rules, 1993, as amended in 2003.

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Typed by PS, transcribed, corrected and pronounced by me in the open court on this the 06^th day of September, 2024.

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(Su. WILLYAHM) PRESIDING OFFICER

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OA 758/2023

SCHEDULE A

Hypothecation of Stock and Receivables

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SCHEDULE B

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District	:	Kannur
Sub District	:	Kathiroor
Taluk	:	Thalasseri
Village	:	Eruvatty
Sy. No.	:	26/3
Re. Sy. No.	:	14/4
Extent	:	8.54 Ares

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DESCRIPTION OF PROPERTY

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All that part and parcel of land measuring 8.54 Ares in Re. Sy. No.14/4 of Eruvatty Village, Kannur District morefully described in Sale Deed No.12/2008 of Kathiroor SRO.

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BOUNDARIES (As per title deed)

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East : Property of Kumbalapravan Kumaran South : Canal and Private Property West : Pathway North : Road

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PRESENT BOUNDARIES

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East : Property of Indira South : Canal West : Main Road North : Road

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(Su. WILLYAHM) PRESIDING OFFICER

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Page 5 of 5

State Bank of India v. Goodwin Automotive Private Limited

Case brief

What is this about?

What did the court decide?

State Bank of India v. Goodwin Automotive Private Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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