Allowed

Union Bank of India (Formerly Andhra Bank) v. M/S Nandini Green House Farms Pvt. Ltd.

DRT21 Jan 2025OA/295/2022

Case brief

AI extract

What is this about?

DRT-II Hyderabad allowed OA for recovery of rs. 5.46 crore against a company and its directors/guarantors. Court excluded unexplained dummy interest of rs. 17 lakh but confirmed liability for rest.

What did the court decide?

Defendants jointly liable to pay Rs. 5.46 crore with future interest; entitled to proceed against OA scheduled assets and properties of Defendants.

Union Bank of India (Formerly Andhra Bank) versus… — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-II AT HYDERABAD

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DATED THIS THE 21ST DAY OF ]ANUARY, 2025

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PRESENT: SH, RAIVIESHWAR KOTHE, B.Com, L.LB,^{(HONS.), M.A.} PRESlDING OFFICER

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ORIGINAL APPLICATION NO: 295 OF 2022

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Between:

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Union Bank Of India (Formerly Andhra Bank)

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Pragath i n aga r Bra nch, 1 7 14, Plot No.1239, 1240, Neeraja Nilayam, Pragathi Nagar, Opp INTU, Kukatpally, Hyderabad, Telangana State.

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........Applicant

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Versus

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M/s.Nandini Green House Farms Pvt. Ltd., Rep by its Directors Sri.B.Venkateswalu,

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And Smt.B.Padmavathi,

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R/o.Plot No,14, Phase-III, Madhuranagar, Hyderabad - 500072 and Room No.1, Plot No.2, Sy.No.453/A, Udda nda^pu r Road, la rcha rla^Village, G.P and Mandal, Mahaboobnagar District.

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Sri. B.Ven kateswa rlu, 5/o. B. Pa^pa iah, Director of M/s.Nandini Green House Farms Pvt.Ltd., Age Major, Occ : Business, R/o. H. No.^{2 -62/F-} 14, Laxmi Sai Enclave, Madhuranagar Colony, Nizampet Village, Hyderabad-500072.

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Smt. B. Prabhavathi, W/o. B.Venkateswarlu, Director of M/s.Nandini Green House Farms Pvt.Ltd., Aqe Major, Occ: Busi ness, R/o. H. No. 2-62/F- 14, Laxmi Sai Enclave, Madhuranagar Colony, Niza m^peL Village, HydRr-a bad^{- 5-0007 2.}

"ff'"v

l-/

oA 29512022

Sri.S.Shankar^{Reddy, S/o.SriS'YellaReddy,} Age 48 Years,^{Occ: Business,} R7o. H. No. 1-2-33/28/A,^{Plot No'46,} Prash a nth^{Naga r, N iza m} Pet, Hyderabad -^{500072, T-s.}

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...... Defendants.

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Counsel for the Applicant^{:Mr'A'V'S'S'Prasad} Counsel for Defendant¹ : Mr'Venkata^{Rangadas Kanuri}

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Counsel^{for Defendants2 to 4: Ex-parte}

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:g-U-B:-

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The applicant^{filed the present Original Applicationu/s'19 of the} Recovery of^{Debtsand Bankruptcy Act, 1993 for recovery of a sum} of Rs.5,64,35,356/-^{from the Defendants1 to 4 jointlyand severally} with costs and future^{interest@10'800/o p'a' with monthlyrests} from the date^{of application till the date of realizationand for saleof} OA schedule^assets.

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The case of the^{ApplicantBank,in brief, is that Defendant No'1 is a} Company and^{defendants 2 and 3 are its Directors'They availed} term loan of^{Rs.455 lakhs on 23'09'2016' Defendants 2 and 3 stood} as^{personal guarantors and defendantNo'4 stoodas a guarantorto} the loan availed by^{1't defendant company'Defendants executedall} necessary loan^{documentsincluding Memorandum of Deposit of} Title Deeds in^{respect of the properties mortgagedwiththe} applicant bank as^{well as other loan documents/lettersof} guarantee/extension of^{mortgageetc', as required from time to} time, Defendants^{failed to repay the loan and accordingly the loan} account became^{NPA on 01.06'2021'The outstandingamount due} fromthedefendantslto4isRs'5,64,35,356/-'Sincethe

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oA 295/2022

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defendants 1 to 4 failed to clear the dues despite notice, this OA is filed for recovery of outstanding dues from the defenda nts.

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Defendants No.2 to 4 were set ex-parte vide^{proceedingsdated} 28.04.2023 as they were called absent and no representation.

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Defendant No.1 filed Written Statement. It is the submission^{of the} defendant No.1 that the applicant bank received^{the amounts} towards term loan account but classified the loan account as^NPA without verifying the records wantonly and intentionally filed the^OA claiming the outstanding dues. The interest charged to the^loan account is highly objectionable as the^{interest was calculatedunder} various heads such as unrecovered interest and^{dummy interest of} R.77,97,37O/- besides debiting expenses illegally and arbitrarilyⁱⁿ violation of RBI guidelines. The OA claim is denied and^the defendants are not liable to^pay the said claim to the^applicant bank. Applicant bank has not released subsidy amount^of Rs.70,00,000/- to the defendants.^Defendants availed^{loan for} carrying the business of Cold Storage Plant which^{falls under} Agricultural Sector and the rate of interest applicable to^the defendants loan account should be 6.5% only as^{per RBI guidelines.} Whereas, applicant charged interest @11.5%^contrary to^{the said} guidelines. Despite specific representation on this aspect, applicant bank did not consider the same. Hence the OA is liable^{to be} dismissed as it is devoid of merlts as applicant bank^hasnot followed the^guidellnes issued by the RBI in tespe;hot^{rcle ot} interest to be charged to the agricultural sector loan717^'i.<I.'

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oAz95/2022

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In order to^{prove its case, the Applicant Bank examinedBhukya} Nanu, Manager,^{as AW-1and marked10 documentsthrough him as} Exhibits A-1^{to A-10.}

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Defendant No.^{1 examinedB. Srinivasa Rao, Directoras DW 1 but} filed no documents.^{Further evidenceof DW'1 was forfeited for non-} representation^{vide docket order dated01'10 2024'}

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Heard Ld. Counsel^{for the ApplicantBank. Learned counsel for 1't} defendant reported^{no oral arguments'Perused the written} arguments^{filed by both sides and the material brought on record'}

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According to the^{learned counselappearing for the applicantbank'} the defendants^{having availedthe term loan as back as 23 09 2016'} failed to discharge^{the liabilitydespite demandnoticedated} 27.08.2027. The^{rate of interest applicableto the defendants} account is floating^{rate categoryand accordingly, applicantbank} charged the^{interest as applicablefrom time to time' The applicant} bank^{provedits case by adducing evidenceand marking documents} executed by the^{defendants which were not disputed by the} defendants in their^{written statement.Hence the applicant bank is} entitled to the OA^claim.

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As per the written^{arguments filed by the 1'r defendant, the OA} claim is not^{correct as several expenses, unrecoveredinterestand} dummy interest^{were clubbed in the claim' The rate of interest} charged by the aPplicant^{bank ranges from 11.5vo to 12'08o/owhich} is in excess of^{6.59o prescribedby RBI for agricultural sector loans'} The claim of Rs.77,97,370/-^{shown at page 115 of the list of} documents filed^{withthe OA, under the head "unrecovereddummy} interest" shows that^{the applicantbanktries- to extracthuge} r7ftvl*

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a't"'

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oA 295/2022

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amounts on the strength of unauthorised amounts included in the calculation of interest. Applicant bank has not accounted for Rs.1,49,06,205/- deposited between 01.03.2017 and 25.OZ.Z0Z|. A civil suit bearing No.OS.136 of 2023 before the Hon'ble Court of Additional Junior Civil Judge at Jedcharla for declaration of title in respect of land in Sy.No.453/A is pending adjudication which in turn made the Company difficult to carry on its activities in the Cold Storage Plant constructed in the said piece of land. Defendants 2 and 3 resigned from the directorship of the 1"t defendant Company who were not able to run the business effectively and profitably. All these developments led to default in payment EMIS towards the loan account. Therefore, the default cannot be treated as a wilful or a malaflde intention. However, due to the support extended by the applicant bank. defendant No,1 has been able to repay Rs.|,49,06,205/-. Adding the subsidy amount of Rs.70,00,000/the total credits into the loan account work out to Rs.z,19,06,205/-. Applicant bank ignored these amounts while arriving at the claim amount in the OA.

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Now, the points that arise for consideration are:-

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Whether the Applicant Bank has proved its claim against the Defendants I to 4 and against OA scheduled assets?

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To what relief?

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Point No.(il: -

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The whole gamut of written statement and written arguments^put forth by the defendants is that the OA is claim is incorrect on three counts. The first one is that the defendant No.1 Company is a Cold Storage Unit and that as per RBI^guidelines, the rate of^interest

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xa.,f,

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oAzgsl2o22

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charged to^{their loan account shall be governedby the sald} guidelines issued^{for the} Purpose^{The applicant bank is silent on} this^{pleadingeven in the writtenarguments However' having} contended^{so, except makinga bald statement'defendants have} not^{placedany material document in supportof their claim as to} their business^{fallingunder the agricultural toans sector'Therefore'} in the absence^{of any evidentiary material' thls plea of the} defendants^{cannot be accePted'}

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Thesecondgrievanceofthel'tdefendantisthatapplicantbank received a^{subsidy of Rs TO,OO,OOO/-and this amount shall be} adjusted^{against the outstandingamountdue under the loan} account.^{However,the defendantfailed to produceanydetailsor} break-Uporthenatureofsubsidysoreceivedbytheapplicantbank and its entitlement^{to set off the claimto that extent'Therefore' in} the absence^{of any material evidencingthe nature of subsidy} alleqedty^{received by the applicant towardsthe subject loan} account,^{this aspect needs no consideration'}

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The third issue^{is with respect to an amountof Rs'17} '97^'3701' added by^{the applicantin the total outstandingdues'The applicant} bank did^{not choose to bring on record as to the nature of interest} that is^{categorisedas "unrecoveredremaining dummyinterest"} despite specific^{pleading by the defendant both in the written} statement^{as well as the written arguments lhave perused the} material^{paper at page 115 of the OA' Except mentioningthe head} "unrecovered^{remainingdummy interest",nothing contains more in} the material^{paperas to the nature of interestor the period to} which it^{pertains.Such is the situation'the plea on addinq} "unrecovered^{remainingdummy lnterest" cannotbe brushed aside} in view of the^{amount being quite significant'Accordingly'the} ,M1.+q

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(_./

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oA 295/2022

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amount of Rs.L7,97,370/- cannot be considered for the purpose of computation of OA claim. Therefore, the OA claim works out to Rs. Rs.5,64,35,356/- minus Rs.17,97,360/_ i.e., Rs.5,46,37,986/_ onty.

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It is brought jn the written arguments of the defendant that defendants 2 and 3 resigned from the directorship of 1st defendant company. However, the defendant has not provided any details as to the date of resignation etc., of the said Directors. Admittedly defendant No.1 Company committed default due to loss in business operation arisen out of dispute over the site of rand over which their Cold Storage Unit stood. i have gone through the statement of account fired by the appricant bank and aI the deposits craimed to have been deposited by the defendants are duly reflected jn the same.

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In view of the above facts and circumstances and taking into account the Evidence Affidavit of AW.1 coupled with the recitats in the documents vtz., Ex.A.1 to A.10 the applicant bank is enti ed to recover the OA claim except the amount of Rs.17,97,360/- claimed under the head "unrecovered remaining dummy interest,,. Accordingly, Defendants 1 to 4 are joinfly and severally liable to pay the OA claim less unexplained claim of Rs.17,97,360/_ included in the total OA claim under the head "unrecovered remaining dummy interest". Accordingly the OA deserves to be allowed on the above said lines.

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Point No.(iil:-

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In the result, the present Original Application is allowed with costs,

as u nder: -

o A29512022

the^{Defendants 1 to 4 are jointlyand severally} i) liable^{to pay to the ApplicantBank a sum of} with Rs.5,64,35,356/-^{less Fts'1-7 '97} '360/future^{interest @10'B0o/o p'a' simple from the} 0.," "t^{filing of the OA till the date of} realization;

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the Applicant^{Bank is entitled to proceed} against^{the oA scheduled hypothecated/} mortgaged^{properties subjectfor realisation of} its debt^{as determinedat (a) above;} iii) the Applicant^{Bank is also entitled to proceed} against^{theperson and properties of} Defendants^{towards realization of its dues; and} iv) The Applicant^{Bank is entitled to the costs of} the oA.

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L7. The Applicant^{Bank is directed to file Cost Memowithin 2 weeks} from the^{date of this Order'}

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Issue^{Recovery Certificate accordingly'} 19, Communicate^{a copy of this order to the parties concerned'} (Dictated to Steno, corrected,^{signed and pronounced by me in the opencourt on this} ',trr-)i;; iry L*uary. 2025t , <sup>ltrn.-.,,n9-,,

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, <sup>ltrn.-.,,n9-,, i'L/'{'ot'-'

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(Rff(ESHWAR^KOTHE) PRESIDING^OFFICER

Union Bank of India (Formerly Andhra Bank) v. M/S Nandini Green House Farms Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Union Bank of India (Formerly Andhra Bank) v. M/S Nandini Green House Farms Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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