Allowed

Laxmi Vilas Bank v. M/s.Super Agencies

DRT8 Mar 2024TA/592/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed the bank's application for a Recovery Certificate. After finding the claim established, the Tribunal awarded interest at 10% simple p.a. from the filing date until realization, permitting recovery via sale of properties or personal liability of the guarantor.

What did the court decide?

Recovery certificate issued; Applicant permitted to realize Rs.1.11 crore plus interest at 10% p.a. (simple) from filing date till realization from defendants jointly/severally.

Laxmi Vilas Bank versus M/s.Super Agencies — Banking and Recovery | DRT (2024)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 8^th day of March, 2024

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PRESENT: SHRI T. RAJESH

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PRESIDING OFFICER

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TA No.592 of 2022

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(Originally filed before DRT-I, Chennai as OA No.378 of 2019 and thereafter transferred to this Tribunal and renumbered as TA No.592 of 2022)

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DBS Bank India Ltd., (Erstwhile The Lakshmi Vilas Bank Ltd.,) Papanadu Branch No.4/80-B-1, East Street Papanadu – 614 626 Orathanadu Taluk, Thanjavur District Represented by its Manager …Applicant

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Versus

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M/s Super Agencies Rep. by its Prox. Ms. Jannath Begum. S W/o Mr. M. Safiulla No.42, Pattani Street, Orathanadu Taluk Thanjavur District – 614 625

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Mr. M. Safiulla S/o Mr. Mohammed Sultan No.19, Thelungan Street, Orathanadu Taluk Thanjavur District = 614 625 …Defendants Counsel for the Applicant Bank : M/s P. Suhadev Counsel for Defendants : M/s S. Anuradha Balaji

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FINAL ORDER

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This application is filed by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 against the defendants’seeking issuance of a Recovery Certificate forrecovery of a sum of Rs.1,11,31,598.50p together with interest at the rate of 11.60% per annum with monthly rests fromthe date of filing of this application till the date of realisation along with costs of the application and for sale of schedule properties.

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The brief facts of the case is as follows: -

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(a) The 1^st defendant, a Proprietary concern engaged in the business dealing with stocks of Nippo batteries, 3 in 1 Agarbathis, Lays, Kurkure, Philips Bulb, AIRCEL and TTK Health care products approached the erstwhile Lakshmi Vilas Bank for grant of credit facility for development of its business. The applicant after considering the said request enhanced the existing credit facility to Rs.84,00,000/- on 31.12.2016 under “Lakshmi Business Credit”. The 1^st defendant executed necessary loan documents on 31.12.2016 and the 2^nd defendant executed guarantee agreement on 31.12.2016.

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(b) The 2^nd defendant originally deposited the title deeds of the property with the applicant and created equitable mortgage over the same in favour of erstwhile Lakshmi Vilas Bank by executing Memorandum of Deposit of Title deeds dated 9.12.2015 for Rs.1,24,00,000/- registered as Doc. No.2162 of 2005, SRO, Orathanadu and the same is extended as security for the enhanced facility also.

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(c) The defendants defaulted in repayments and failed to regularize the loan account despite repeated demands and hence the loan account was classified as NPA on 28.11.2017 and also sent a recall notice dated 29.11.2017 recalling the entire loan. Further, the applicant invoked the provisions of SARFAESI Act and issued the demand notice on 15.12.2017 under Section 13(2) of the Act calling upon the defendants to clear the outstanding dues within 60 days from the date of receipt of the order.

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(d) The defendants did not come forward to clear the dues despite repeated requests resulting in the applicant filing this application for recovery of its dues.

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The defendants filed their reply statement that the application is an abuse of process of law and has been filed only to harass the defendants and to sustain the illegal claim put forth by the applicant. It is stated that the applicant had taken the signatures of the defendants on various blank documents and the same has been filled in later to suit their claim for the purpose of filing this application. It is also stated that the applicant has charged usurious interest and the statement of account is not proper and is not supported by any mandatory certificate. It is further stated that in view of closure of business by AIRCEL the defendants suffered huge loss. It is stated that when the defendants have been servicing the loan account properly the applicant has wrongfully classified the loan account as NPA and request of the defendants to sell one of the mortgaged properties was also not considered. The applicant though sanctioned the proposal for One Time Settlement submitted by the defendants and the defendants had made an upfront amount of Rs.15,00,000/- it failed to extend the time for compliance resulting in loss to the defendants. Thus, submitting the defendants prayed for dismissing the application.

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The applicant bank filed 16 documents along with proof affidavit and got them marked as Exhibits A-1 to A-16.

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The defendants filed their Counter Proof Affidavit reiterating the contentions made in the reply statement and submitted that the witness was not examined when the documents were marked. It is also stated that the applicant has produced the Memorandum of Deposit of Title deeds securing an amount of Rs.1,24,00,000/- whereas the applicant had produced loan documents only for Rs.84,00,000/-.

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Heard the Ld. Counsel for the Applicant Bank and the defendants. Perused the records.

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Having heard the Ld. Counsels for the parties and after perusing the records, the Tribunal framed the following points for consideration: -

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1. Whether the applicant bank has established its claim against the defendants? If so, for what amount?

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2. Whether the applicant bank is entitled for pendent lite and future interest, if so, at what rate ?

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Point No.1

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Whether the applicant bank has established its claim against the defendants? If so, for what amount?

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The applicant bank in its endeavor to establish its claim against the defendant examined its official as AW1 and got marked exhibits Ex.A-1 to A-16. Ld. Counsel for Applicant placing reliance on the proof affidavit of AW-1, besides Exhibits A-1 to A-16 strenuously contended that the claim of the applicant stands established, as such, the applicant is entitled for a recovery certificate.

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Ld. Counsel for Applicant Bank would contend that even as per the Reply Statement filed, the defendants have not denied availing of credit facility, execution of loan and security documents and as such the said admission is sufficient enough to allow the claim of the applicant. Ld. Counsel would contend that the statement of accounts filed is proper and supported by appropriate certificate under Bankers’ Book Evidence Act and Information Technology Act and hence the contention of the defendants regarding the amount claimed cannot be countenanced. It is further contended that the contention of the defendants that they had made to sign in blank unfilled documents is also false and the said contention is made by every defaulting borrower.

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The applicant bank has filed the statement of accounts accompanied by certificates under Bankers’ Book Evidence Act and therefore the claim of the defendants that the amount claimed is not proper, applicant has claimed usurious interest and the statement of account is not supported by documents fails.

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In so far as the contention of the defendants that the applicant had obtained the signatures of the defendants in blank unfilled document and had filled them later to suit their case in filing this application also cannot be sustained for the reason that the said claim is made by every defaulting borrower. Further, Hon’ble DRAT, Mumbai in the matter of Sangli Bank Ltd. Vs. Prabha K.Maheshwari and others reported in MANU/DM/0025/2005 held in paragraph 8 that;

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“8. The grant of loan as alleged by the Bank and defendant Nos.6 to 10 having signed a guarantee agreement is an admitted position. Their

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contention is that on 30^th July, 1992, defendant Nos. 1 to 5 had sent blank letter of lien, demand note for grant of Rs.30 lacs to the Bank, which indeed, appears to be correct. However, it has to be pointed out that settled legal position is that the person who signs blank standard documents takes responsibility for the same and the plea of non est factum is not available to him”

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Therefore, this defence taken by the defendants also fails.

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As regards the submission of the defendants that the applicant had refused to extend the time for payments under One Time Settlement is concerned it is to be stated that it is the prerogative of the applicant whether to accept, reject or extend the time frame of settlement and this Tribunal has no jurisdiction over the same.

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Therefore, in the light of the discussion as aforesaid, it is clear that the proof affidavit and the documents filed along with by the applicant remain unchallenged by the defendant. Further, the Tribunal on careful perusal of the unrebutted Proof Affidavit of AW-1 besides Exhibits A-1 to A-16 is fully satisfied that the applicant has established its claim. This point is answered accordingly.

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Point No.2

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Whether the applicant bank is entitled for pendent lite and future interest, if so, at what rate?

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In terms of Sec. 19 (20) of the RDB Act, the Tribunal has been empowered to pass an order regarding payment of interest from the date on or before which payment of the amount is found due, up to the date of realisation or only payment, as it think fit to meet the ends of justice. Further, Hon’ble Supreme Court, in the judgement (reported in II 2009 BC pg. 696) in the matter of State Bank of India – vs – Sarath Textiles, held that “ Sec. 19 (20) of the RDDB & FI

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Act confers discretion on the Tribunal to award interest on the applicant being as it thinks fit to meet the ends of justice. ”. Further, Hon’ble Supreme Court of India in the matter of Central Bank of India – vs – N. Raveendra (reported in 2002 [1] SCC pg. 367) held that “ Sec. 34 of CPC confers discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit de-horse notwithstanding the contract between the parties. ” Sec. 19 (20) of the RDDB & FI Act is akin to Sec. 34 CPC.

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While it is the case of the applicant that the applicant bank is entitled for contractual rate of interest till discharge of the entire outstanding dues, however, the defendant would contend that in so far as pendente lite and future interest is concerned, the contractual rate of interest may not be applied. It is to be stated that the claim of the applicant bank includes the rate of interest and other charges payable as per the contract. The Tribunal already held that the applicant bank is entitled for the amount claimed in the OA. As already stated, the Tribunal has awarded contractual rate of interest as claimed by the applicant bank till the date of filing the OA and in view of the fact that the subject loan being is a loan for business purpose and the lending rate had considerably come down, the Tribunal is of the view that the defendants are entitled for a reduced rate of interest. Therefore, under these circumstances, the Tribunal is inclined to grant pendente lite and future interest @ 10% p.a. simple on the OA claim amount from the date of filing till the date of realization. Point No.2 is answered accordingly.

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In view of the afore mentioned discussions, the TA is disposed off in the following manner: -

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(a) TA No.592 of 2022 stands allowed.

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(b) Applicant is permitted to realize an amount of Rs.1,11,31,598.50p with further interest @10% per annum (simple) from the date of filing of the application till the date of realization in full, from the defendants jointly and severally after deducting all the amounts realized / received by them during the pendency of OA, and also by selling the schedule properties and other assets of the defendants.

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(c) If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant, the 2^nd defendant is personally liable for all such amounts due.

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(d) Applicant is permitted to realize cost of the proceedings and shall file cost memo within 7 days from the date of the order.

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(e) The Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of this final order.

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Communicate a copy of the order to the parties concerned in terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993.

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(Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 8^th day of March, 2024)

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Sd/(T. RAJESH ) PRESIDING OFFICER DRT-II, CHENNAI

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Laxmi Vilas Bank v. M/s.Super Agencies

Case brief

What is this about?

What did the court decide?

Laxmi Vilas Bank v. M/s.Super Agencies

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Cases cited

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