Allowed

Canara Bank v. M/s Sai Sakthi Printers

DRT26 Mar 2024TA/654/2023

Case brief

AI extract

What is this about?

The Tribunal allowed the bank's application for a recovery certificate of over Rs. 2.20 crore availed by a partnership firm. It found the claim established and reduced the future interest rate from the contractual rate to 10% p.a. simple interest.

What did the court decide?

Recovery Certificate issued permitting realization of Rs.2.20 crore plus 10% p.a. simple interest from filing date.

Canara Bank versus M/s Sai Sakthi Printers — Banking and Recovery | DRT (2024)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 26^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.654 of 2023

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(Originally filed before DRT-I Chennai as OA No.72 of 2021 and thereafter transferred to this Tribunal and renumbered as TA No.654 of 2023)

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Canara Bank (Formerly Syndicate Bank) Aminjikarai Branch No.6/20, Govindan Street Ayyavoo Colony, Aminjikarai Chennai – 600 029 Rep. by its Chief Manager and

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Principal Officer ….Applicant

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Versus

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M/s Sai Sakthi Printers Rep. by Partners Mr. S. Sudhakar & Mrs. S. Kanchana No.35, Mohammed Hussain Street Royapettah, Chennai – 600 014

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Mr. S. Sudhakar S/o S. Sundara Babu

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No. Lilly 24, Le Orchad Ben Foundation, Padi Kuppam Road Anna Nagar, Chennai – 600 040

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1. Mrs. S. Kanchana W/o S. Sudhakar No. Lilly 24, Le Orchad Ben Foundation, Padi Kuppam Road Anna Nagar, Chennai – 600 040

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Mr. A. Humayun Basha S/o K. Ameer Basha No.26, Nair Iyya Pillai Street Royapettah, Chennai – 600 014 ….Defendants Counsel for the Applicant Bank : M/s P. Srennivasulu Counsel for Defendants : M/s K. Kathiresan & B. Rajesh

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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 for recovery of a sum of Rs.2,20,48,805.55p together with interest at the rate of 14.65% per annum with monthly rests from the date of filing till the date of realisation along with the costs of the application and for sale of schedule mentioned properties.

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The brief facts of the case is as follows: -

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(a) The 1^st defendant, a Partnership firm, represented by defendants 2 and 3 as it Partners approached the applicant on 10.05.2016 for grant of credit facility for development of its business and the applicant considering the said request the applicant vide sanction dated 30.06.2016 sanctioned SOD facility of Rs.1,50,00,000/- to the 1^st defendant. The 1^st defendant represented by defendants 2 and 3 executed necessary loan and security documents on 30.06.2016. The defendants 2 to 4 executed guarantee agreement on 30.06.2016 thereby guaranteeing due repayment of the credit facility availed by the 1^st defendant.

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(b) The 2^nd defendant deposited the title deeds of his property, more fully described in the schedule to the TA, with the applicant bank on 27.6.2016 with an intention to create equitable mortgage over the same in favour of the applicant and confirmed the same by executing Memorandum of Deposit of Title deeds dated 27.6.2016 registered as Doc. No.3727/2016, SRO, Virugambakkam.

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(c) The defendants defaulted in repayments and hence the loan account was classified as NPA on 27.11.2018. It is the case of the applicant that as the defendant did not come forward to clear the outstanding dues despite repeated demands, the applicant issued demand notice and possession notice under Section 13(2) and 13(4) of the SARFAESI Act respectively and the defendants 2 and 3 had filed SA No.87 of 2019 challenging the possession notice before this Tribunal. The defendants did not come fowrad to clear the outstanding dues, hence the applicant is constrained to file this TA.

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The defendants filed their reply statement denying the averments contained in the TA. It is contended that the defendants having invoked the provisions of the SARFAESI Act and issued the notices under Section 13(2) and 13(4) of the Act is not entitled to file this TA. It is stated that the defendants had been making the remittances regularly, however, the same has not been given due credit to and if the same had been given credit to only a very meager amount would be due in the loan account. It is also stated that the applicant did not consider the request of the 1^st defendant for enhancement of credit facility which has resulted in huge loss. It is stated that the applicant failed to give necessary relief granted by the Government in view of COVID-19 pandemic. It is stated that the statement of account is not supported by mandatory certificate and hence the same cannot be relied upon. It is also stated that the applicant had charged usurious interest. Thus submitting the defendants prayed for dismissing the application.

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The applicant bank filed its proof affidavit along with 22 documents, which are marked as Exhibits A-1 to A-22. However, Exhibits A-2 to A-4, A-10, A-12 to A-14 and A-20 were marked subject to proof and relevancy being photocopies.

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The defendants filed their Counter Proof Affidavit reiterating the contentions made in the reply statement.

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Heard the Ld. Counsel for the parties. Perused the records.

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Having heard the Ld. Counsel for the applicant 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 defendants examined its official as AW1 and got marked exhibits Ex.A-1 to A- 22. Ld. Counsel for Applicant placing reliance on the proof affidavit of AW-1, besides Exhibits A-1 to A-22 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 defendant has not denied availing of credit facility,

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execution of loan and security documents and the said admission is sufficient enough to allow the claim of the applicant. Ld. Counsel would also 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 amount claimed is wrong cannot be countenanced. It is further contended that the defendant though filed the reply statement, and Counter Proof Affidavit did not choose to adduce any rebuttal evidence.

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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 applicant stands proved. Even otherwise no evidence was let in against or no anomaly is pointed out in the statement produced by the applicant.

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In so far as the contention of the defendants that the various remittances made by them have not been given due credit to is concerned, it is to be stated that the defendants did not produce any evidence regarding the payments made so as to enable the Tribunal to confront the statement of accounts. Hence this claim of the defendants fails.

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Further, though the defendants entered appearance and filed reply statement and counter proof affidavit, no specific denial other than the general denial was put forth and added to they did not produce any evidence in support of their contentions in the reply statement.

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In so far as the contention of the defendants that having resorted to action under SARFAESI Act the applicant cannot proceed file this application is concerned, it is settled position of law that the applicant can resort to

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simultaneous proceedings under both the Act and hence this ground of the defendants also fails.

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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-22 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 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 TA. As already stated, the Tribunal has awarded contractual rate of interest as claimed by the applicant bank till the date of filing the TA and in view of the fact that the subject loan being a Secured Overdraft loan 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 TA 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.654 of 2023 stands allowed.

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(b) Applicant is permitted to realize an amount of Rs.2,20,48,805.55p 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 1 to 3 jointly and severally after deducting all the amounts received by them during the pendency of TA, and also by selling the schedule mentioned property 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 Bank, the defendants 2 to 4 are 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 receipt 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 26^th day of March, 2024)

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

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Canara Bank v. M/s Sai Sakthi Printers

Case brief

What is this about?

What did the court decide?

Canara Bank v. M/s Sai Sakthi Printers

Case brief

What is this about?

What did the court decide?

What the court decided

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