Allowed

Canara Bank v. M/s Sanaul Engeneering Workshop

DRT29 Jan 2024OA/989/2023

Case brief

AI extract

What is this about?

DRT allowed bank's original application for recovery of debt and issuance of recovery certificate. Court awarded uniform simple interest at 8% per annum considering pandemic impact and market rates. Defendants found jointly and severalally liable.

What did the court decide?

Duty to pay Rs. 25,96,142/- with 8% simple interest from date of filing till realization. Recovery certificate issued. Parties to appear before recovery officer.

Canara Bank versus M/s Sanaul Engeneering Workshop — 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.989/2023

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DATE OF INSTITUTION: 04.07.2023

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DATE OF DECISION: 29^th DAY OF JANUARY, 2024

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Canara Bank, a body corporate, constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, having its Head Office at 112, J.C. Road, Bangalore-560002 and a Branch earlier at Sector-15, now at SCO No. 11, HUDA Market, Sector16, Faridabad, Haryana-121002

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…..Applicant

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Versus

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M/s Sanual Engineering Workshop, through its Proprietor, Sh. Sanual s/o Sh. Hakmuddin, Plot No. 81, Baba Hraday Ram Colony, Mujeshar, Faridabad, Haryana

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Sh. Sanual s/o Sh. Hakmuddin, Proprietor of M/s Sanual Engeneering Workshop r/o House No. 237, Near Masjid SholakaMarroli, Palwal, Haryana-121006

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…..Defendants

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Argued by: Ms Vandana Bhatia, Advocate for the applicant Bank (through VC) Defendants ex parte vide order dated 31.08.2023

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FINAL ORDER

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Present Original Application was instituted by the applicant bank

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under Section 19(1) of the Recovery of Debts due to Banks and

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Financial Institutions Act, 1993 (hereinafter referred to as ‘the Act’ for brevity), against the defendants for recovery of

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OA/989/2023 CANARA BANK Vs M/S SANUAL ENGENEERING WORKSHOP AND ANOTHER 2

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Rs.25,96,142/- (Rupees Twenty Five Lakh Ninety Six Thousand

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One Hundred and Forty Two Only). It has been filed through Sh. Aasish Malik, Principal Officer of the applicant bank stated to be competent to institute the Original Application General Power of Attorney dated 18.12.2017, Annexure-A1 (copy).

¶19

The brief facts of the case of the applicant as per the Original Application are that defendant No.1 through defendant No.2 had approached the applicant bank for grant of Term Loan Facility of Rs. 15,00,000/- For Purchasing Machinery vide loan application Form dated 19.08.2017 for loans to Micro and Small Enterprises, Annexure-A2 (copy).

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The applicant bank sanctioned aforesaid facility to the defendants, as per terms and conditions which were duly accepted by the defendants.

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In order to secure the aforementioned credit facility, the defendants executed letter of evidencing execution of documents dated 19.08.2017, Annexure-A3 (copy), deed of hypothecation dated 19.08.2017 regarding machinery, Annexure-A4 (copy), letter of proprietorship dated 19.08.2017, Annexure-A5 (copy), letter dated 25.08.2017 regarding particulars of vehicles/machinery/equipment/livestock etc. hypothecated, Annexure-A6 (copy), letter of undertaking dated 19.08.2017 regarding terms and conditions, Annexure-A7 (copy) and affidavit regarding declaration, Annexure-A8 (copy).

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It is further the case of the applicant bank that the loan facility was duly availed of by the defendants but they failed to

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OA/989/2023 CANARA BANK Vs M/S SANUAL ENGENEERING WORKSHOP AND ANOTHER 3

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maintain the financial discipline of the applicant bank leading to the loan account becoming irregular and it being classified as NPA on 19.12.2017. The defendants executed acknowledgement of debt and security letter dated 18.08.2020, Annexure-A10 (copy).

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It is further the case of the applicant bank that after adjusting debit and credit entries in the loan account, a sum of Rs.25,96,142/(Rupees Twenty Five Lakh Ninety Six Thousand One Hundred and Forty Two Only), is recoverable against the defendants as per statement of account along with certificate under Section 2A of the Bankers’ Books Evidence Act, 1891, Annexure-A9 (colly) (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, but since none appeared on behalf of the defendants, thus, the defendants were proceeded against ex-parte vide order dated 31.08.2023 .

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In support of contents of the OA, affidavit of evidence of Sh. Ashish Malik, Officer/Authorised Officer of the applicant bank was filed.

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This Tribunal has heard ex-parte arguments advanced by the learned counsel for the applicant bank and gone through the record carefully.

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It was argued by the learned counsel of the applicant bank that in view of unrebutted documentary evidence brought on record,

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OA/989/2023 CANARA BANK Vs M/S SANUAL ENGENEERING WORKSHOP AND ANOTHER 4

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the applicant bank had proved its case against the defendants for recovery of the amount sought. From perusal of Annexures-A1 to A10 , it is clear that the defendants had approached the applicant bank for availing of the loan facility which was 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. Unfortunately, the defendants failed to pay back the loan as per terms and conditions of the agreement executed between the parties. From the documentary evidence brought on record, it is proved that applicant bank is entitled to recover a sum of Rs.25,96,142/(Rupees Twenty Five Lakh Ninety Six Thousand One Hundred and Forty Two Only) from the defendants.

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In so far as pendente lite and future interest is concerned, in relief clause, the applicant bank has claimed rate of interest @10.20% per annum. In statement of account, AnnexureA9 (copy), rate of interest has been mentioned @10.20% per annum.

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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, purpose of loan, i.e. business (purchase of machinery), quantum of loan, 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%

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OA/989/2023 CANARA BANK Vs M/S SANUAL ENGENEERING WORKSHOP AND ANOTHER 5

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per annum from the date of filing of the OA till realisation of the amount ordered vide this order. It is ordered accordingly.

¶37

In the result, the Original Application is allowed with costs holding that the defendants are liable to pay to the applicant bank a sum of Rs.25,96,142/- (Rupees Twenty Five Lakh Ninety Six Thousand One Hundred and Forty Two Only) with current and future simple interest @8% per annum w.e.f. 04.07.2023 , till the date of realisation of the amount. The liability of the defendants shall be joint as well as several. If the dues of the bank remain unsatisfied, the applicant bank shall be at liberty to recover the same by attachment and sale of hypothecated/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 13.03.2024.

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

Canara Bank v. M/s Sanaul Engeneering Workshop

Case brief

What is this about?

What did the court decide?

Canara Bank v. M/s Sanaul Engeneering Workshop

Case brief

What is this about?

What did the court decide?

What the court decided

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