Allowed

Union Bank of India v. M/S Malhotra Cycle Industries and Another

DRT12 Feb 2025OA/1213/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the Union Bank of India's application for recovery of Rs. 35.78 lakhs outstanding against the proprietors and firm of M/s Malhotra Cycle Industries. It issued a Recovery Certificate and granted simple interest at 8.00% p.a., authorizing recovery via hypothecated or personal assets.

What did the court decide?

Recovery Certificate issued; Defendants liable to pay Rs. 35,78,476.81 plus 8% simple interest; recovery via sale of hypothecated or personal assets.

Union Bank of India versus M/S Malhotra Cycle Industries and… — Banking and Recovery | DRT (2025)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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ORIGINAL APPLICATION NO.1213/2024 PRESIDED OVER BY MRIDULESH KUMAR SINGH

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DATE OF INSTITUTION: 24.09.2024

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DATE OF DECISION: 12.02.2025

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Union Bank of India, a body corporate constituted under Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 having its Head Office at 239, Vidhan Bhawan Marg, Nariman Point, Mumbai and having a branch office inter-alia at, Civil Lines, College Road, Ludhiana, through duly Authorized Person and Attorney Holder Sh. Kuljit Saluja, Branch Manager.

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……..Applicant Versus

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1. M/s Malhotra Cycle Industries, B-21-6745, Street No.5, Daba Road, New Janta Nagar, Ludhiana-141003 (through its Prop. Sh. Devinder Pal defendant no. 2)

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2. Sh. Devinder Pal S/o Sh. Ram Nath, B-21-6745, Street No. 5, Daba Road, New Janta Nagar, Ludhiana-141003 (Proprietor of M/s Malhotra Cycle Industries, defendant no. 1)

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………Defendants

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Advocates:

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Argued by Sh. Amod Kumar Thakur, Advocate proxy for Sh. R.K. Chauhan, Advocate for the applicant Defendants are ex-parte

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FINAL ORDER

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Present Original Application was instituted by the applicant under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, against the defendants for recovery of Rs.35,78,476.81p (Rupees Thirty Five Lacs Seventy Eight Thousand Four Hundred Seventy Six and Paisa Eighty One only). The Original Application has been filed through Sh. Kuljit Saluja, Branch Manager of the applicant, who is competent to institute the Original Application vide Power of Attorney dated 26.10.2016, which is Annexure A1 to this OA.

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The brief facts of the OA are that the defendant No.1 through its proprietor i.e. defendant no.2 had approached the applicant for the grant of Credit Card Limit of Rs.35.00 Lacs under CGTMSE vide Application Form for MSMEs dated 16.02.2021, which is Annexure A2 to this OA.

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The applicant sanctioned the Credit Card Limit of Rs.35.00 Lacs under CGTMSE vide Sanction Letter dated 07.06.2021, which is Annexure A4 to this OA and the terms and conditions were duly accepted by the defendants.

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Defendant no.1 had hypothecated its movable Properties/Assets i.e. all Stocks of bicycle frames, Cycle parts and related goods vide Hypothecation Agreement of Goods and Debts dated 08.06.2021, which is Annexure A10 to this OA.

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Documents executed:- GST Registration Certificate along with Annexure-A and Annexure-B dated 25.09.2017, which is Annexure A3 to this OA; Terms and Conditions of Sanction, Undertakings Annexure-II, Undertakings Annexure-IV all dated 07.06.2021, which are Annexures A5 to A7 to this OA; Demand Promissory Note, Letter of Continuity, AD-02A, Letter of Undertaking not to alienate Hypothecated goods, Letter of Undertaking from the borrower (s), Request Letter, Interest Agreement, Deed of Guarantee, Letter of undertaking from Guarantor all dated 08.06.2021, which are Annexures A8, A9, A11 to A17 to this OA; Debit balance confirmation letter dated 08.05.2024, which is Annexure A18 to this OA; Letter by bank for adjustment of overdue dated 05.08.2024, which is Annexure A19 to this OA; Legal Notice dated 07.08.2024 along with postal receipts, which is Annexure A20 to this OA and Statement of Account along with Certificate u/s 63 Indian Evidence Act, which are Annexures A21 & A22 to this OA.

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The loan account became irregular and was classified as NPA and after adjusting debit and credit entries in the loan account there was a debit of Rs.35,78,476.81p, which is recoverable and the

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defendants were served recall notices but they did not repay the outstanding amount, therefore, the applicant requested to accept the application and to issue Recovery Certificate accordingly.

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The defendant was served notice to appear before this Tribunal but no one appeared on behalf of defendant and he was proceeded exparte on 21.01.2025.

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In support of the OA, affidavit of Sh. Kuljit Saluja, Branch Manager, Union Bank of India has been filed.

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Heard arguments and perused record.

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It was argued by learned proxy counsel that in view of the documentary evidence brought on record which had gone unrebutted, the applicant had proved its case. From the perusal of all the Annexures A1 to A22 to this OA, it is proved that the defendants approached applicant for availing of the loan facility which was granted to them and for that they had executed all the relevant documents in favour of the applicant. The defendants failed to pay back the loan as per terms and conditions of the agreement between the parties. Subsequently, account of the defendants was classified as NPA. From the documentary evidence brought on record, it is proved that applicant is entitled to recover a sum of Rs.35,78,476.81p (Rupees Thirty Five Lacs Seventy Eight Thousand Four Hundred Seventy Six and Paisa Eighty One only) along with interest from the defendants, jointly and severally, from the date of filing of the present Original Application till realization of the account. 10. In so far as pendent elite and future rate of interest is concerned, the applicant in relief clause has claimed interest @12.00%p.a. plus penal interest @2.00%p.a. with monthly rests from 20.08.2024 till the realization.

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The Tribunal is of the considered opinion that sometimes in appropriate cases the prerogative of mercy is the brightest jewel in the crown of the Judge. Keeping in view the facts and circumstances of the instant case including nature of the mortgaged property, undertaking

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of the defendants, quantum of loan and prevalent market rates of interest which have gone drastically downhill in yester years, while exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant uniform simple interest @8.00%p.a. in the loan account from the date of filing of the OA till realization of the amount ordered vide this final order. It is ordered accordingly. 11. In the result, the application is allowed declaring that the defendants are liable to pay to the applicant a total sum of Rs.35,78,476.81p (Rupees Thirty Five Lacs Seventy Eight Thousand Four Hundred Seventy Six and Paisa Eighty One only) jointly and severally, with costs, current and future simple interest @8.00%p.a. in the loan account from the date of filing of OA till the date of realization of the amount. Accordingly, the applicant shall be entitled to recover aforesaid amount from the sale of hypothecated/mortgaged properties of the defendants in execution proceedings if not sold earlier under the provisions of the SARFAESI Act, 2002. If the dues of the applicant still remain unsatisfied, it shall be entitled to recover the same by attachment and sale of personal assets of the defendants. The applicant is at liberty to enforce the claim through due process of law. 12. Any other application pending stands disposed of. 13. Issue Recovery Certificate accordingly. 14. Parties to appear before Learned Recovery Officer of this Tribunal on 13.03.2025. 15. Copy of this order be given dasti to the applicant and be sent to defendants through registered/speed post and this order be also uploaded on the official website of this Tribunal and record be consigned.

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Pronounced by me in the open Tribunal . Dated: 12.02.2025 (MRIDULESH KUMAR SINGH) Presiding Officer, DRT-III, Chandigarh

Union Bank of India v. M/S Malhotra Cycle Industries and Another

Case brief

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Union Bank of India v. M/S Malhotra Cycle Industries and Another

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