Dismissed

Stressed Assets Stabilization Fund v. M/S Bvv Papers Industries Ltd.

DRT14 Nov 2024TA/121/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal-I, Chennai, examined an application for recovery of debt against a company and its directors. As no documentary evidence proving a personal guarantee or joint liability was produced by the applicant, the claim against the individual directors was dismissed.

What did the court decide?

The claim against Defendants 2 & 3 stands dismissed; parties to bear their own costs.

Stressed Assets Stabilization Fund versus M/S Bvv Papers… — Banking and Recovery | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL –I AT CHENNAI

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Dated this 14^th Day of November, 2024

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PRESENT: SHRI A.S.JAYACHANDRA

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Presiding Officer

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T.A. No.121 of 2022

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(Old No.OA 41/2020, DRT-II, Chennai)

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Stressed Assets Stabilization Fund (SASF), Rep. by its Assistant General Manager, IDBI Tower, WTC Complex, Cuffe Parade, Mumbai – 400 005.

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. . . Applicant

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Versus

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M/s. B.V.V. Paper Industries Ltd., Rep. by its Managing Director,

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148 D, Palani Road,

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Venkatesa Mills Post,

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Udumalpet – 642 128.

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Shri. B.V.V.S.S.Krishnaprasad (Managing Director) S/o Late B.V.Satyanarayana Murthy, A.16, Soundraraja Krishna Moorthy Street, Gandhi Nagar, Udumalpet – 642 154.

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3. Smt. Sumathi K. Prasad,
W/o Shri. B.V.V.S.S.Krishna	prasad,
148 D, Palani Road,
Venkatesa Mills Post,
Udumalpet – 642 128.			. . . Defendants
Counsel for Applicant	:-	M/s.S.Sathiyanarayanan
Counsel for D1	:-	No relief sought.
Counsel for Defendant 2 & 3	:-	Exparte on 06.06.2023

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: - O R D E R - :

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The Applicant has filed the present OA under Section 19(1) of the Recovery of Debts and Bankruptcy Act, 1993 against the Defendants jointly and severally for recovery of a total sum of Rs.378,06,98,209/- from the date of application with monthly rests, till actual realization of the decree amount with costs.

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FACTS OF THE CASE :-

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1.0 The Applicant is a trust created by the Union of India with the object of acquiring and managing the Non Performing Assets of IDBI and is notified financial institution under the Recovery of Debts and Bankruptcy Act. It is contended that the IDBI had sanctioned term loan of Rs.285 Lakhs to the Defendant and disbursed on 11.09.1995, 05.12.1995 and 24.07.1997 into the account of BVVPIL 0001001. Likewise Rupee Term Loan of Rs.200 Lakhs were disbursed into the account of BVVPIL 0002002, disbursed on 05.01.1996 and 22.07.1997 and foreign currency loan amounting to INR Rs.2,86,71,280/disbursed on 22.06.1995 and the total sum thus sanctioned is Rs.7,71,71,280/-.

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1.1 The Defendant had created a security of the immovable property situated at Nallur, Pushpathur Village, Palani Taluk, Dindigual District, Tamilnadu bearing various survey numbers for total extent of 106.765 Acres by deposit of title deeds with IDBI on 12.05.1997. At the request of the Defendant the payment schedule was revised by the IDBI during July 1998.

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1.2 The account has become NPA on 31.03.1999. A reference with BIFR was made and the BIFR declared the Defendant a sick company on 09.05.2021 and IDBI was appointed as operating agency for Defendant No.1.

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1.3 IDBI transferred and assigned the loan facility in favour of the applicant trust vide deed dated 30.09.2004. Various One Time Settlement facilities offered were rejected by the Applicant. The Defendant came out of the BIFR on 01.12.2016.

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1.4 The Applicant issued a demand notice dated 20.07.2017 and the Defendant had acknowledged the debt in their balance sheet for the year ended on 31.03.2017 and 31.03.2018. A notice was also issued dated 20.07.2017 calling upon the Defendant to discharge the liability of Rs.238,92,81,782/- along with interest and such demand notice was never heeded to. Due accounts are maintained in the usual books of accounts.

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1.5 Thus the Applicant claims recovery of Rs.378,06,98,209/- as on 01.09.2019. Hence the OA.

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2.0 Initially the OA was filed before DRT-II, Chennai in OA No.41/2020 and the same is transferred to this Tribunal consequent to the notification of DFS dated 04.10.2022. During the pendency of the matter before the DRT-II, Chennai, one Advocate on 03.01.2022 appeared and undertook to file the vakalathnama for Defendants 2 & 3 and submitted that the Defendant No.1 Company is under CIRP. Thereafter the vakalathnama was not filed nor the written statement on behalf of Defendants 2 & 3.

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2.1 However, after transfer of this matter the Ld. Counsel for the Applicant Bank was asked to intimate the next date of hearing to the Defendants 2 & 3 by an order dated 29.03.2023. The Affidavit of Service is filed by the Ld. Counsel and upon the intimation sent and acknowledged, Defendants 2 & 3 were placed exparte by this Tribunal on 06.06.2023.

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3.0 Thus there is no written statement of Defendants 2 & 3.

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3.1 During the course of proceedings on 31.08.2023 a memo is filed by the Applicant intimating that the resolution professional appointed by the Hon'ble NCLT, the bank had realized Rs.15.78 Crores from the Defendant No.1 Company and no relief is claimed against Defendant No.1.

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3.2 To establish their case, the Applicant had examined AW1 Sh.Hemangi Algaonkar, the AGM of the Applicant and closed their side.

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3.3 When the matter was at the stage of pronouncement of orders, this Tribunal noted that the relevant documents to fix the liability on Defendants No.2 & 3 is not relied on nor furnished as noted in the Order Sheet dated 07.11.2023. However a chance was given to produce the documents by 30.11.2023. Thereafter it was submitted on behalf of applicant that they would report the settlement by 01.01.2024. Since then no settlement is reported. However, on 08.10.2024 it is noted that the debt is assigned in favour of M/s.OMKARA Assets Reconstructions Pvt. Ltd. and that the official from the said assignee was present and took time to produce the deficit documents and to file proper application for substitution. On 17.10.2024, it is noted that no steps taken nor the documents produced. Thus the matter is being taken up for pronouncement of final order based on the merits.

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3.4 The prayer in the OA is to seek an order of recovery of a sum of Rs.378,06,98,209/- against the Defendants 1 to 3 jointly and severally. As noted earlier the claim against Defendant No.1 Company is not pressed, which is noted in the order sheet dated 31.08.2023.

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4.0 In view of the above, the only point that arises for determination is:-

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“Whether the Defendants 2 & 3 are liable to pay to the Applicant the sum as claimed in the present TA?”

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5.0 In order to answer the above point for determination, the available evidence on record is perused. Though the Defendants 2 & 3 remained exparte, this Tribunal is duty bound to examine the claim based on the merits in order to ascertain the liability. The written argument filed by the Applicant is also perused. The main contention in the written argument is that though the relief is not pressed against Defendant No.1, the OA is maintainable against Defendants No.2 & 3 who are the guarantors.

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5.1 In order to consider the claim of the bank, against Defendants 2 & 3, this Tribunal examined all the documentary evidence adduced by the AW1. Twenty three documents are produced in evidence which are as under:

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Exh. A1 – Sanctioned Letter to D1 dated 23.12.1994.

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Exh.A2 – Certified Copy of the Board Resolution of D1 dated 30.12.1994.

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Exh.A3 – Sanction Letter of TL to D1 dated 03.11.1995.

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Exh.A4 – Interest revision letter dated 06.12.1995.

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Exh.A5 – Copy of the Board Resolution of D1 dated 07.03.1997

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Exh.A6 – Declaration dated 09.05.1997 executed by D2. This document is not a Personal Guarantee deed executed by Defendant No.2, but executed on behalf of BVV Paper Industries Limited, but signed by Defendant No.2 in the capacity of the Managing Director.

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Exh.A7 – The entry of deposit of title deeds

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Exh.A8 – Letter of D1 regarding repayment schedule dated 19.07.1998.

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Exh.A9 – Letter of D1 dated 18.08.2000, addressed to Secretary BIFR.

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Exh.A10 – One Time Settlement proposal of D1 dated 15.03.2006

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Exh.A11 – Reply of Applicant dated 28.03.2006.

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Exh.A12 – Revised One Time Settlement proposal by D1 dated 26.09.2015

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Exh.A13 – Recall notice dated 18.08.2017 by the Applicant.

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Exh.A14 – Reply of D1 dated 14.03.2017 addressed to AGM.

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Exh.A15 – Demand notice dated 20.07.2017.

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Exh.A16 – Reply to Demand notice by D1 Lawyer dated 26.09.2017

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Exh.A17 – Response of Applicant thereof dt.18.10.2017

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Exh.A18 – Balance Sheets ending for the FY 31.03.2017

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Exh.A19 – Balance Sheets ending for the FY 31.03.2018

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Exh.A20 – Revised One Time Settlement proposal dated 09.08.2018

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Exh.A21 – Trust deed of Applicant A21.

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Exh.A22 – Transfer Deed dated 24.09.2004.

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Exh.A23 – Certified copies of the accounts statement.

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5.2 The contention of the Applicant in the written argument is to pass the decree against Defendants 2 & 3 who are guarantors. Such a pleading is not found in the OA except in the cause title describing the Defendant No.2 as the Managing Director. The rank of the 3^rd Defendant is also not pleaded.

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5.3 The Applicant has not produced any documentary evidence to establish that Defendant No.2 & 3 have offered themselves as the guarantors / surety to the debt availed by the Defendant No.1 Company. It is worthy to note that the recall notice at Exh.A13 and the demand notice at Exh.A15 issued against the Defendant No.1 Company are not addressed to the Defendants No.2 & 3. This Tribunal had pointed out the same as far back as 07.11.2023, thereafter the matter was adjourned several times on 30.11.2023, 01.01.2024, 13.02.2024, 05.04.2024, 02.05.2024, 24.05.2024, 30.05.2024, 14.06.2024, 31.07.2024, 16.08.2024, 19.08.2024, 05.09.2024, 30.09.2024, 08.10.2024, 17.10.2024. In spite of many adjournments, no document is produced.

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5.4 Suffice to say that after examining the pleadings and the evidence available on record, this Tribunal does not find any document to fasten the joint and several liability against Defendants No.2 & 3 for the debt availed by the Defendant No.1 Company. In the result the following:-

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(a) The claim against Defendant No.1 Company is not pressed after part realization as reported.

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(b) The claim against Defendants 2 & 3 stands dismissed.

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Sd/-

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(A.S.JAYACHANDRA) PRESIDING OFFICER DRT-I, CHENNAI

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(Dictated to PS, typed in the system, corrected, signed and pronounced by me on this 14^th day of November, 2024)

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Stressed Assets Stabilization Fund v. M/S Bvv Papers Industries Ltd.

Case brief

What is this about?

What did the court decide?

Stressed Assets Stabilization Fund v. M/S Bvv Papers Industries Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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