Allowed

Canara Bank v. M/S Tushar Furniture Udyog

DRT3 Jan 2024OA/84/2022

Case brief

AI extract

What is this about?

In this Original Application, the applicant bank sought recovery of Rs. 54,02,680.47 flagship debt against guarantees and mortgages. The Tribunal found the evidence unrebutted and the application admissible. It allowed the application, directed recovery of the principal sum plus uniform simple interest at 8% per annum from the date of filing, and ordered issuance of a Recovery Certificate.

What did the court decide?

Recovery of Rs. 54,02,680.47 with simple interest @8% per annum from 30.12.2021 till realization; issuance of Recovery Certificate.

Canara Bank versus M/S Tushar Furniture Udyog — Contract and Commercial Disputes | DRT (2024)

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DEBTS RECOVERY TRIBUNAL-2, CHANDIGARH, PRESIDED OVER BY M.M. DHONCHAK

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ORIGINAL APPLICATION NO.84/2022

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DATE OF INSTITUTION: 30.12.2021

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DATE OF DECISION: 3^rd DAY OF JANUARY, 2024

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Canara Bank , a body corporate with perpetual succession constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, having its Head Office at 112, J.C. Road, Bangalore and inter alia a Branch at Fatehabad, District Fatehabad, Haryana, through its Power of Attorney and Officer, Sh. Akshay Chohla

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……..Applicant

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Versus

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M/s Tushar Furniture Udyog through its Proprietor, Sh. Ram Niwas r/o House No. 15, Block No. 5, VPO Kirdhan, Fatehbad, District Fatehabad (Haryana)-125053

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Sh. Ram Niwas s/o Sh. Bhadar, Proprietor, M/s Tushar Furniture Udyog r/o House No. 15, Block No. 5, VPO Kirdhan, Fatehbad, District Fatehabad (Haryana)-125053

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Sh. Chanan Mal s/o Sh. Dhan Pat r/o VPO Kirdhan, Near Hanuman Mandir, Fatehbad, District Fatehabad (Haryana)-125053

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......Defendants

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Argued by: Ms Tanu Sidhu proxy counsel for Sh. Rajan Puri, Advocate for the applicant bank Ms Neha Arora proxy counsel for Sh. Gurnam Singh, Advocate for defendant Nos. 1 and 2 Defendant No.3 ex parte vide order dated 03.01.2024

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FINAL ORDER

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OA/84/2022 CANARA BANK Vs M/S TUSHAR FURNITURE UDYOG AND OTHERS 2

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Present Original Application was instituted by the applicant bank under Section 19(1) of the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter referred to as ‘the Act’ for brevity), against the defendants for recovery of Rs.54,02,680.47/- (Rupees Fifty Four Lac Two Thousand Six Hundred Eighty and Forty Seven Paisa Only) . It has been filed through Sh. Akshay Chohla, Officer of the applicant bank stated to be competent to institute the Original Application vide Power of Attorney dated 20.10.2016, Annexure-A1 (copy).

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The brief facts of the case of the applicant as per Original Application are that defendant No.1 through defendant No.2 had approached the applicant bank for grant of Overdraft Cash Credit Limit of Rs. 25 lakh which was further enhanced to Rs. 35 lakh, term loan-I of Rs. 2.15 lakh under Credit Guarantee Funds for Micro Units, term loan-II of Rs. 6 lakh, term loan-III of Rs. 6.50 lakh under the Credit Guarantee Funds for Micro Units, Overdraft Cash Credit Limit of Rs. 35 lakh under COVID funded Interest Term Loan . Defendant No. 3 stood as a guarantor for repayment of the loan.

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The applicant bank sanctioned aforesaid credit facilities to the defendants vide sanction memorandums dated 07.01.2016, 05.01.2018, 20.01.2018, 16.11.2018, 17.11.2018 and 26.08.2020, Annexures-A2, A6, A9, A11, A13 and A15 (copy), as per terms and conditions which were duly accepted by the defendants.

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In order to secure the aforementioned credit facilities, the defendants executed various loan and security documents, i.e. guarantee agreements dated 07.01.2016 and 05.01.2018, Annexures-

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OA/84/2022 CANARA BANK Vs M/S TUSHAR FURNITURE UDYOG AND OTHERS 3

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A4 and A8 (copy), link letter dated 05.01.2018 in respect of enhancement of credit facility, Annexure-A5 (copy), supplemental agreement dated 05.01.2018, Annexure-A6 (copy), deeds of hypothecation dated 20.01.2018 and 17.11.2018, Annexures-A10 and A14 (copy) and agreement-cum-deed of hypothecation dated 20.01.2018, Annexure-A12 (copy). 5. The aforesaid limits were further secured by creation of mortgage by defendant No. 2 in respect of plot measuring 1 Kanal 8 Marla situated in the revenue estate of Kirdhan, Sub-Tehsil BhattuKalan, District Fatehabad, Haryana, fully detailed in para No. 5(xxi) of the Original Application.

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The documents relating to the mortgage are as under:

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i. Registered title deed dated 25.06.2015, Annexure-A16 (copy).

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ii. Letters dated 07.01.2016, 05.01.2018 and 16.11.2018 evidencing

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deposit of title deed, Annexures-A17, A18 and A19 (copy).

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It is further the case of the applicant bank that the loan facilities

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were duly availed of by the defendants but they failed to maintain the financial discipline of the applicant bank leading to the loan accounts becoming irregular and those being classified as NPA on 27.12.2020. The defendants executed revival letters dated 31.12.2018 and 10.06.2020, Annexures-A20 to A23 (copy). The applicant bank recalled entire outstanding amount vide legal notices dated 26.04.2021 along with its postal receipt, Annexure-A24 (colly), A25 to A28 (copy), but to no avail.

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It is further the case of the applicant bank that after adjusting debit and credit entries in the loan accounts, a sum of Rs.54,02,680.47/- (Rupees Fifty Four Lac Two Thousand Six

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OA/84/2022 CANARA BANK Vs M/S TUSHAR FURNITURE UDYOG AND OTHERS 4

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Hundred Eighty and Forty Seven Paisa Only) , is recoverable against the defendants as per statements of accounts dated 23.12.2021, certified under Bankers’ Books Evidence Act, 1891, Annexures-A29 to A33 (copy).

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Since the defendants did not repay the outstanding amount, therefore, the applicant bank preferred the present Original Application for issuance of Recovery Certificate.

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Notices of the Original Application were duly served upon the defendants. Since none appeared on behalf of defendant No.3, thus, defendant No.3 was proceeded against ex-parte vide order dated 03.01.2024 .

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Defendant Nos. 1 and 2 filed written statement contending that the OA was time barred; that the statement of the account was manipulated; that the balance confirmation letters were blank; that no mortgage deed was executed; that the OA was filed by incompetent person and no notice was given regarding recall of the loan amount as well as declaring the loan account as NPA. Rest of the averments made in the OA were also denied in the written statement.

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Rejoinder to the written statement was filed wherein the averments made in the OA were reiterated and that of the written statement were denied.

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In support of contents of the Original Application, affidavit of evidence of Sh. Akshay Chohla, Officer of the applicant bank was filed.

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This Tribunal has heard arguments advanced by the learned counsel for both the parties and also gone through the record carefully.

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OA/84/2022 CANARA BANK Vs M/S TUSHAR FURNITURE UDYOG AND OTHERS 5

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It was argued by the proxy counsel that in view of the unrebutted documentary evidence brought on record, the applicant bank had proved its case against the defendants for recovery of the amount sought. The sum and substance of the written statement filed by defendant Nos. 1 and 2 is a bit vague and non-committal and defendant Nos. 1 and 2 appear to be playing hide and seek because they have to pay back the money to the applicant bank. It is very easy to borrow the money but at times it is very difficult to return the same to the lender.

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It would be relevant to reproduce a part of Order dated 22.09.2023, passed by the Registrar-in-charge of this Tribunal:

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“Both the parties are proceeded for admission or denial. Officer concerned of the applicant bank produced original documents and counsel for defendant Nos.1 and 2 admitted signatures in all the documents A-1 to A-33 but denied contents.”

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It would be relevant to quote a part of Para No.11 of the judgment of Hon'ble Delhi High Court in the case of ‘ Indian Bank vs

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Cheese Wafers (India) Pvt. Ltd. decided on 29 April, 1998’ :

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" The defendants have also executed a letter of renewal on 17.2.1992 and a demand promissory note dated 17.2.1992 for a sum of Rs. 4,60,911.48 paise and promised to liquidate its liability shortly photocopies of these documents are on pages 29 and 30 of the paper book. Can it be said that in view of their unambiguous and unequivocal acknowledgement of the liability it is open for the defendants to now claim and contend that they are not liable to pay the dues of the plaintiff Bank on account of certain adjustment not given by Bank. The answer is in the negative. Defendants did not raise even a whisper after signing this letter of acknowledgement of liability, therefore, now

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OA/84/2022 CANARA BANK Vs M/S TUSHAR FURNITURE UDYOG AND OTHERS 6

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to contend that the documents signed by the defendants were blank, which were subsequently filled up, is only an afterthought to cover their acknowledgement which they have made in the year 1992 Why the defendants chose to keep silent about their signatures having been obtained on blank documents. This plea was taken at the time of filing of the application for leave to defend not earlier at any stage. Conclusion, therefore, is that plea now sought to be raised by the defendants to the effect that the signatures were obtained on blank documents, is merely a sham plea and devoid of any force ."

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Hon’ble High Court of Punjab and Haryana in the case of “ The Central Bank of India Ltd. Vs. F. Rur Chand Kura Mal ,” 1958 AIR (P&H) 159 , held that a person admitting his signature on a document, is to explain how his signatures came to be obtained on it.

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In the facts and circumstances of the case, this Tribunal finds nothing to believe the version set up by defendant Nos. 1 and 2 in their written statement. From perusal of Annexures-A1 to A33 , it comes out that the defendants had approached the applicant bank for availing of the loan facilities which were granted to them. It is further clear that the defendants had executed all the relevant documents as stated above in favour of the applicant bank. In view of unrebutted documentary evidence brought on record, the applicant bank has proved its case for recovery of the amount against the defendants and it is proved that the applicant bank is entitled to recover a sum of Rs.54,02,680.47/- (Rupees Fifty Four Lac Two Thousand Six Hundred Eighty and Forty Seven Paisa Only) from the defendants, from the date of filing the present Original Application, till realisation of the amount.

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OA/84/2022 CANARA BANK Vs M/S TUSHAR FURNITURE UDYOG AND OTHERS 7

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In so far as pendent lite and future interest is concerned, the applicant bank in relief clause, has claimed rate of interest @8.50% per annum for OCC facility, @9.90% per annum for term loan-I, @10.50% per annum for term loan-II, @10.50% per annum for term loan-III and @8.50% per annum for OCC. In sanction memorandum dated 07.01.2016, 05.01.2018, 20.01.2018, 16.11.2018 and 17.11.2018, Annexures-A2, A6, A9, A11 and A13 (copy), the rate of interest has been mentioned @10.90% per annum, @9.85% per annum, @9.85% per annum, @10.35% per annum and @10.85% per annum, respectively.

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This Tribunal is of the considered opinion that sometimes in appropriate cases the prerogatives of mercy and magnanimity are the brightest jewels in the crown of the Judge. Keeping in view the facts and circumstances of the instant case including the Pandemic Covid-19 affecting businesses, nature of the mortgaged property, purpose of loan, i.e. business , quantum of loan and prevalent market rates of interest which have gone drastically downhill in yesteryears, while exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant uniform simple interest @8% per annum from the date of filing of the OA till realisation of the amount ordered vide this order. It is ordered accordingly. 14. In the result, the Original Application is allowed with costs holding that the defendants are liable to pay to the applicant bank a sum Rs.54,02,680.47/- (Rupees Fifty Four Lac Two Thousand Six Hundred Eighty and Forty Seven Paisa Only) with current and future simple interest @8% per annum w.e.f. 30.12.2021 , till the date of realisation of the amount. The liability of the defendants shall

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OA/84/2022 CANARA BANK Vs M/S TUSHAR FURNITURE UDYOG AND OTHERS 8

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be joint as well as several. Accordingly, the applicant bank shall be at liberty to recover aforesaid amount from the sale of mortgaged/hypothecated property of defendants in execution proceedings, if not sold earlier under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 or otherwise. If the dues of the bank still remain unsatisfied, the applicant bank shall be at liberty to recover the same by attachment and sale of personal assets of the defendants. However, the applicant bank is at liberty to enforce the claim through due process of law.

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Issue Recovery Certificate accordingly.

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Parties to appear before Recovery Officer concerned on 23.02.2024 .

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Copy of this order be sent to the applicant bank and the defendants through registered/speed post. This order be uploaded on the official website of this Tribunal.

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Pronounced in the open Tribunal

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(M.M. Dhonchak) Presiding Officer DRT-2, Chandigarh

Canara Bank v. M/S Tushar Furniture Udyog

Case brief

What is this about?

What did the court decide?

Canara Bank v. M/S Tushar Furniture Udyog

Case brief

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What did the court decide?

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