Allowed

Canara Bank v. M/S Swastik Knit Fab and Another

DRT24 Apr 2025OA/1522/2022

Case brief

AI extract

What is this about?

The applicant bank filed an application for recovery of loan dues from a sole proprietorship firm that was granted various credit facilities. The defendants appeared ex-parte, and the Tribunal allowed the application, directing the payment of principal plus a uniform simple interest rate of 8% per annum.

What did the court decide?

Debtors directed to pay sum of Rs. 1,28,85,603.44 with simple interest at 8% per annum; recovery certificate issued.

Canara Bank versus M/S Swastik Knit Fab and Another — Banking and Recovery | DRT (2025)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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ORIGINAL APPLICATION NO.1522/2022

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PRESIDED OVER BYMRIDULESH KUMAR SINGH

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DATE OF INSTITUTION: 16.09.2022

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DATE OF DECISION: 24.04.2025

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Canara Bank, Head Office at J C Road, Banglore and having branches all over India and one of its branches amongst other place at MSMSE Sulabh, BNC, Ludhiana, District Ludhiana, through its Branch Manager/Attorney holder/Authorized Signatory Mr. Tarun Goyal.

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……..Applicant

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Versus

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M/s Swastik Knit Fab, a sole proprietorship firm, having its place of business at B-XXXI-1700, New Shakti Nagar, Backside Dada Motors, Ludhiana through its sole proprietor

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Sh. Munish Gupta S/o Sh. Subash Gupta, sole proprietor of M/s Swastik Knit Fab, R/o B-XXXI-1700, New Shakti Nagar, Backside Dada Motors, Ludhiana

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….……Defendants

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Advocates:

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Argued by Sh. Sunil Salotra, Advocate proxy for Sh. Nitin Grover, 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.1,28,85,603.44p (Rupees One Crore Twenty Eight Lacs Eighty Five Thousand Six Hundred Three and Paise Fourty Four Only). The Original Application has been filed through Mr. Tarun Goyal, Branch Manager o f the applicant, who is competent to institute the Original Application Authority Letter dated 15.09.2022, 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

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2 OA NO.1522/2022 CANARA BANK VS M/S SWASTIK KNIT FAB AND ANOTHER

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grant of CC Limit of Rs.60.00 Lacs and Term Loan I of Rs.10.00 and further from time to time approached the applicant for enhancement of CC Limit to Rs.75.00 Lacs and various credit facilities i.e. Term Loan II of Rs.11.00 Lacs, GECL I of Rs.15.00 Lacs, WCDL of Rs.7.50 Lacs, Term Loan III of Rs.21.00 Lacs and GECL II of Rs.12.23 Lacs vide Offer Letter dated 02.06.2020, which is Annexure A24 to this OA.

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The applicant sanctioned CC Limit of Rs.60.00 Lacs and Term Loan I of Rs.10.00 and further from time to time applicant sanctioned the enhancement of CC Limit to Rs.75.00 Lacs and also sanctioned various credit facilities i.e. Term Loan II of Rs.11.00 Lacs, GECL I of Rs.15.00 Lacs, WCDL of Rs.7.50 Lacs, Term Loan III of Rs.21.00 Lacs and GECL II of Rs.12.23 Lacs vide sanction Letter dated 29.01.2015, 13.07.2018, 12.03.2020 and 02.06.2020, which are Annexures A2, A10, A21 and A25 to this OA and the terms and conditions were duly accepted by the defendants.

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Defendants no.1 had hypothecated its movable properties/assets i.e. Stock, Raw Material, Work in Progress, Finished Goods and Machinery vide Composite Hypothecation Agreement, Deed of Hypothecation, Supplemental Composite Hypothecation Agreement, dated 30.01.2015, 13.07.2018, 14.12.2018, 02.06.2020, 31.08.2020 and 26.10.2021, w hich are Annexures A3, A11, A15, A28, A30, A33 and A44 to this OA.

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Documents executed:- Request for Overdraft Facility, Pronote and Letter of undertaking dated 30.01.2015, which are Annexures A4 to A6 to this OA; Letter of Proprietorship, Renewal Letter and acknowledgement of debt all dated 14.02.2017, which are Annexures A7 to A9 to this OA; Pronote and Letter of undertaking, which are Annexures A12 and A13 to this OA; Acknowledgement of Debt dated 29.01.2018, which is Annexure A14 to this OA; Request for Overdraft Facility, Pronote, Link Letter, Letter of Renewal, Acknowledgement of

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3 OA NO.1522/2022 CANARA BANK VS M/S SWASTIK KNIT FAB AND ANOTHER

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Debt all dated 14.12.2018, which are Annexures A16 to A20 to this OA; Renewal Letter and acknowledgement of debt all dated 12.03.2020, which are Annexures A22 to A23 to this OA; Letter of Proprietorship, Pronote, Take delivery Letter, Link Letter, all dated 02.06.2020, which are Annexures A26, A27, A29 and A31 to this OA; Letter of Proprietorship, Pronote, Take delivery Letter, Agreements of Term Loan, Particular of Machinery, Letter of Undertaking all dated 31.05.2021, which are Annexures A32, A34 to A41 to this OA; Letter of Proprietorship, Pronote both dated 26.10.2021, which are Annexures A42 and A43 to this OA; Acknowledgement of Debt dated 25.06.2021, which is Annexure A45 to this OA; Demand Notice dated 29.04.2022, which is Annexure A46 to this OA and Statements of accounts duly certified, which are Annexures A47 to A52 to this OA. 5. The loan accounts became irregular and were classified as NPA and after adjusting debit and credit entries in all the loan accounts there was a debit of Rs.1,28,85,603.44p, which is recoverable and the 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. 6. The defendants were served notices to appear before this Tribunal but no one appeared on behalf of defendants and they were proceeded ex-parte on 17.04.2025.

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In support of the OA, affidavit of Mr. Tarun Goyal, Branch Manager, Canara Bank h as been filed. 8. Heard arguments and perused record. 9. 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 A52 to this OA, it is proved that the defendants approached applicant for availing of the loan facilities which were

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4 OA NO.1522/2022 CANARA BANK VS M/S SWASTIK KNIT FAB AND ANOTHER

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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, accounts of the defendants were classified as NPA. From the documentary evidence brought on record, it is proved that applicant is entitled to recover a sum of Rs.1,28,85,603.44p (Rupees One Crore Twenty Eight Lacs Eighty Five Thousand Six Hundred Three and Paise Fourty Four Only) along with interest from the defendants, from the date of filing of the present Original Application till realization of the accounts. 10. In so far as pendent elite and future rate of interest is concerned, the applicant in relief clause has claimed interest detailed as:a. Interest @10.25%p.a. in CC Limit and Term Loan I with monthly rests b. Interest @12.15%p.a. in Term Loan II with monthly rests c. Interest @9.05%p.a. in WCDL with monthly rests d. Interest @8.90%p.a. in GECL Accounts with monthly rests plus penal interest @2.00%p.a. in all from 02.09.2022. 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 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 @08.00%p.a. in all the loan accounts from the date of filing of the OA till realization of the amount ordered vide this final order. It is ordered accordingly.

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5 OA NO.1522/2022 CANARA BANK VS M/S SWASTIK KNIT FAB AND ANOTHER

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In the result, the application is allowed declaring that the defendants are liable to pay to the applicant a total sum of Rs.1,28,85,603.44p (Rupees One Crore Twenty Eight Lacs Eighty Five Thousand Six Hundred Three and Paise Fourty Four Only) with costs, current and future simple interest @08.00%p.a. in all the loan accounts 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 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.

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Any other application pending stands disposed of.

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Issue Recovery Certificate accordingly.

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Parties to appear before Learned Recovery Officer of this Tribunal on 21.05.2025.

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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: 24.04.2025

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(MRIDULESH KUMAR SINGH) Presiding Officer,

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DRT-III, Chandigarh

Canara Bank v. M/S Swastik Knit Fab and Another

Case brief

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Canara Bank v. M/S Swastik Knit Fab and Another

Case brief

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