Allowed

Indian Overseas Bank v. M/S Leo Star Impex Pvt. Ltd.

DRT13 Oct 2025OA/321/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an application filed by Indian Overseas Bank to recover dues of over ₹2.27 crores against a loan company and guarantors. The Tribunal passed an ex-parte order admitting the bank's evidence as uncontravened and directed payment and execution of security.

What did the court decide?

Recovery of ₹2,27,10,885.15 with interest; enforcement against hypothecated stocks and mortgaged flats; issuance of Recovery Certificate.

Indian Overseas Bank versus M/S Leo Star Impex… — Contract and Commercial Disputes | DRT (2025)

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ORIGINAL APPLICATION NO.321 OF 2022

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DEBTS RECOVERY TRIBUNAL No.2, MUMBAI

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PRESIDING OFFICER: HARISH KUMAR KAUSHIK

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ORIGINAL APPLICATION NO.321 OF 2022

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Date of Institution: 17.07.2020 Date of Decision: 13.10.2025

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TOTAL CLAIM AMOUNT:

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₹ 2,27,10,885.15/-

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Indian Overseas Bank, A body corporate constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act,1970 having its Central Office at 763, Anna Salai Chennai – 600 002, Regional Office at 5^th Floor, E-Wing, Maker Toer Cuffe Parade, Mumbai-400 005 and Branch Office amongst others at CRJ Plaza, Ground Floor, Lamington Road, Mumbai-400 007, through its Branch Manager Shri Pralhad Prakash Pawaskar

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… Applicant

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Versus

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M/s Leo Star Impex Pvt Ltd A company registered under Companies Act 1956, having its registered office address at D/404 Amrat CHS Ltd., Jaywant Sawant Road, Dahisar (West), Mumbai-400 068

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Shri Meghal M. Mehta Director of M/s. Leo Star Impex

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Page 1 of 17

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ORIGINAL APPLICATION NO.321 OF 2022

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Pvt. Ltd., An adult, Indian Inhabitant residing at D/404 Amrat CHS Ltd., Jaywant Sawant Road, Dahisar (West), Mumbai-400 068 3. Shri Mukesh Kumar M. Mehta Director of M/s. Leo Star Impex Pvt. Ltd. An Adult, Indian Inhabitant residing at 7, Kashmira Apartment, Nag Talvadi Village-Navsari, District-Valsad, State-Gujarat-396 350 4. Shri Biraj M Mehta Guarantor of M/s. Chamunda Creation An Adult, Indian Inhabitant residing at D/404 Amrat CHS Ltd., Jaywant Sawant Road, Dahisar (West), Mumbai-400 068 …Defendants

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APPEARANCES

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For the Applicant : Ms Salma Ghaswala i/b M/s Ghaswala & Asso. - Advocate For Defendants : None – Advocate

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J U D G M E N T

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(1) This is an application was initially filed under Section 19(1) of the Recovery of the Debts due to Banks and Financial Institutions Act, 1993 renamed as Recovery of the Debt and Bankruptcy Act, 1993 (for short, ‘the 1993 Act’) to recover

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Page 2 of 17

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ORIGINAL APPLICATION NO.321 OF 2022

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₹2,32,16,183.26/- (Rupees Two Crores Thirty Two Lakhs Sixteen Thousand One Hundred and Eighty Three paisa Twenty Six Only) with pendente lite and future interest payable @ 16% interest plus @ 2% monthly rest as an additional interest from 16.07.2020 monthly rest thereon from the date of presentation of the Original Application i.e. 17.07.2020 till payment/realization and to enforce the hypothecated and mortgaged securities. Thereafter vide Order sheet dated 07.02.2024, the Applicant waives the penal interest of ₹5,05,298.11/- (Rupees Five Lakhs Five Thousand Two Hundred Ninety-Eight Only) and does not press for relief in respect to that penal interest @ 2%. Thus, the Actual claim due will be ₹ 2,27,10,885.15/- (Rupees Two Crores TwentySeven Lakhs Ten Thousand Eight Hundred EightyFive and paisa Fifteen Only).

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The details of the claim amount are as under: -

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Sr No	Nature of Facility	O/s.	Undebited interest from 01.03.2019 to 15.07.2020	Penal Interest from 01.07.2020 to 15.07.2020	Total
1	RUBF	1,29,85,6 09.00	28,69,930.16	3,58,616.27	1,62,13,155.43
2	UBDF	28,00,000 .00	6,18,608.22	77,326.03	34,95,934.25
3	PC	25,00,000 .00	5,52,328.77	69,041.10	31,21,369.87

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Page 3 of 17

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ORIGINAL APPLICATION NO.321 OF 2022

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CD	3,82,891. 36	2,517.64	314.71	3,85,723.71
Total Amount	-	-	-	2,32,16,183.26
Less:				5,05,298.11
Actual Amount				2,27,10,885.15

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(2) It is undisputed fact in the matter that the Defendant nos.1 to 4 were duly served with the summons vide order-sheet dated 21.02.2023. Despite service, the defendants did not enter their appearance and therefore, they are set ex-parte on 12.10.2023.

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(3) Defendant no.1, private limited company through its directors Defendant nos.2 and 3 are the principal borrowers who approached the Applicant Bank seeking financial assistance by way of PC/PCFC/DBPF/UDBF/RDBF/RUBF Facility

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wherein Defendant No.4 acted as a Guarantor to the said loan. Pursuant to the loan application made by defendants, the Applicant sanctioned the loan vide Sanction Letter dated 05.07.2014 in sum of ₹1,15,00,000/- (Rupees One Crores Fifteen Lakhs Only) against direct bills payable with interest at the rate of 11.75 % per annum floating interest. Further, on request of the defendants vide Sanction letter dated 19.09.2016 an amount of ₹1,15,00,000/- (Rupees One Crores Fifteen Lakhs Only) under

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DBPF/UDBF/RDBF/RUBF/LABC upto 189 days

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Page 4 of 17

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ORIGINAL APPLICATION NO.321 OF 2022

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(Direct bills) @ 1-year MCLR + 0.65% i.e. 10.20% p.a. with monthly rests covered under CGTMSE Scheme. Thereafter on the request of the Defendants the loan of PC/PCFC (fresh) was granted to an amount of ₹25,00,000/- (Rupees Twenty-Five Lakhs Only) @ 1 year MCLR @ 8.40% + 0.40% i.e. 8.80% p.a. with monthly rests and enhanced DBPF/UBDF/RDBF/RUBF/LABC Facility to the extent of ₹1,65,00,000/- (Rupees One Crores Sixty-Five Lakhs Only) vide Sanction/Renewal Letter dated 13.12.2017 @ 6M MCLR i.e. 8.20% + 0.65% i.e. 8.85% per annum presently with monthly rest and Forward contracts (CCF @ 2%) for an amount of ₹5,00,00,000/- (Rupees 5 Crores Only) as per applicable Libor rate was granted. Pursuant to the said sanction/renewal letter, the Defendant No.1 passed a Board Resolution dated 14.12.2017 and admitted that the Company obtained various credit facilities to the extent of ₹1,90,00,000/secured by hypothecated properties and equitable mortgage of properties already created by the defendants. The said loan is covered under ECIB (ECGC) Scheme.

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Page 5 of 17

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ORIGINAL APPLICATION NO.321 OF 2022

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The details of the amount sanctioned to the

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defendants are as given below: -

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S r N	Date of Sanctio n	Nature of Facility	Amount (in lakhs)	ROI	Security	Collateral
o
1	05.07.2 014	PC/PCFC against LC/orders/ DBPF/UDB F/RDBF/R UBF/LABC Confirmed upto 180 days	115.00 (Freshl)	Base rate plus. 0.75% at present 11.00%	Fully paid stocks/Acce pted hundies/Do cument of title to goods. Charges applicable as.	1.Equitable mortgage followed by Registered Memorandum with regard to the property situated at Flat No. D- 404, 4th Floor, Amarat CHSL, D wing. Jaywant Sqwant Road, Dahisar (W). Mumbai - 400 068 valued at Rs.0.64 crores by M/s.AVSA India Consultancy Services on 24.06.2014. 2.Equitable Mortgage followed by Registered Memorandum with regard to the property situated Flat No B-301,

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Page 6 of 17

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ORIGINAL APPLICATION NO.321 OF 2022

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					3rd Floor, "B" Wing. Madhupuri Apartments valued at Rs.153.85 lacs by M/s.Kanti Karamsey & Company on 06.11.2013.
	Forward Contract limit	115.00	Charges as applicab le	-
Total	-	230.00	-	-	-
2 19.09.2 016	DBPF/UDB F/RDBF/R UBF/LABC upto 189 days (Direct bills)	115.00	1-year MCLR + 0.65% i.e. 10.20% p.a. with monthly rests	Accepted hundies/ Document of title of goods	Same as above Guaranteed by Mr Meghal Mukesh Mehta; Mr Biraj Mukesh Mehta and Mr Mukesh M Mehta.
Total	-	115.00	-	-	-
3 13.12.2 017 (Renew ed)	PC/PCFC against firm orders upto 180 days	25.00 (Fresh)	1 Year MCLR @8.40% + 0.40% i.e. 8.80% p.a. Presentl y with monthly rest.	Hypothecati on of Stocks	Same as above.
	DBPF/UDB F/RDBF/R UBF/LABC upto 150 days (Non- LC) (Direct bills)	165.00	6M MCLR @8.20% + 0.65% i.e. 8.85% p.a. with monthly	Hypothecati on of Export receivables and other current assets of the firm. Accepted Hundies/

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Page 7 of 17

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ORIGINAL APPLICATION NO.321 OF 2022

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			rest.	Documents
				of title to
				goods
	Forward	500.00	Applicab	Undertaking
	contracts		le LIBOR	letter of the
	(CCF @ 2%)		rate	firm
Total	-	690.00	-	-	-

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(4) On the dates given below, defendants signed and executed the loan and security documents as set out in paragraph nos.5.5 to 5.13 of the Original Application. Defendants hypothecated properties, that is, Stock of raw materials, work-in-progress, finished goods, Book-debts existing and furniture and mortgaged: -

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(i) Residential Flat No.404 , adm. 425 Square Feet (Carpet area) on the Fourth Floor, of the D Wing & building known as "Amrat D CHS." situated at Jaywant Sawant Marg, Next to Irani Wadi. Dahisar (W), Mumbai - 400 068 and lying on the plot of land bearing Survey No. 255 & CTS No. 926, 926/1 To 926/14, and Survey No.256, Corresponding CTS No. 925 of Village: Dahisar, Taluka Borivali & District Mumbai Suburban within the limits of Municipal Corporation of Greater Mumbai and

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(ii) Residential Flat No. 301 , adm. 920

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Page 8 of 17

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ORIGINAL APPLICATION NO.321 OF 2022

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Square Feet (Carpet area) on the Third Floor, of the B Wing & building known as "Madhupuri Apartments" situated at Gokhale Road. Dahanukar Wadi, Kandivali (W), Mumbai-400 067 and lying on the plot of land bearing Survey No. 81B (pt), CTS No. 1017 of Village: Kandivli, Taluka Borivali & District of Mumbai and Sub-District of Bandra, Mumbai within the limits of Municipal Corporation of Greater Mumbai to secure the loan.

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The details of the documents executed by the Defendants as per Sanction Letter dated 05.07.2014 are as under:-

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(a) Accepted Sanction Letter dated 05.07.2014; (b) (F-14-A) Demand Promissory Note dated 08.07.2014 for an amount of ₹1,15,00,000/-;

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(d) (F-107) Hypothecation of Book Debts dated 08.07.2014;

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(e) (F-110A) Letter of Hypothecation dated 08.07.2014;

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(f) (F-110E) Letter of Hypothecation of all over

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ORIGINAL APPLICATION NO.321 OF 2022

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facility dated 08.07.2014;

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(g) (F-111) Guarantee for all over facilities of 08.07.2014 for an amount of ₹1,15,00,000/-; executed by Defendant Nos.2 to 4 dated 08.07.2014;

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(h) Memorandum of Deposit of Equitable Mortgage dated 07.07.2014 inrespect of Residential flat no.404/A Wing, 4th floor, adm. About 425 sq/ft carpet area in ther building known as “Amrat Co-op. Hsg. Society situated at Jayawant Sawant Road, Dahisar (W), Mumbai-400 658 bearing Survey No.255, 256 C.T.S.No.925, 926,926/1 to 926/14 of Mumbai Suburban and Flat No.301 adm. 920 Square Feet (Carpet area) on the Third Floor, of the B Wing & building known as "Madhupuri Apartments" situated at Gokhale Road. Dahanukar Wadi, Kandivali (W), Mumbai400 067 and lying on the plot of land bearing Survey No. 81B (pt), CTS No. 1017 of Village: Kandivli, Taluka Borivali & District of Mumbai and Sub-District of Bandra, Mumbai within the limits of Municipal Corporation of Greater Mumbai; (i) (F-379A) Confirmation letter of Deposit of Title Deeds dated 08.07.2014.

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Page 10 of 17

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ORIGINAL APPLICATION NO.321 OF 2022

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The details of the documents executed by the Defendants as per Sanction Letter dated 19.09.2016 and 13.12.2017 are as under:-

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(a) Accepted Sanction Letter dated 19.09.2016;

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(b) Renewal/ Sanction Letter dated 13.12.2017;

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(e) (F-14-A) Demand Promissory Note, for ₹25,00,000/-dated 23.04.2013;

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(f) (F-16) Letter of Continuity for ₹75,00,000/- dated 15.12.2017;

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(g) (F-251B) Advances against Goods awaiting shipment, Packing Credit dated

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15.12.2017;

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(h) (F-110A) Letter of Hypothecation for ₹25,00,000/- dated 15.12.2017;

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(i) (F-107) Letter of Hypothecation (Bills) Dated 15.12.2017;

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(j) (F-110E) Letter of Hypothecation, all over facility of ₹1,90,000/-, dated 15.12.2017.

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(k) (F-111A) Guarantee for all over facilities of ₹1,90,000/- executed by Defendant No.2 to 4, dated 15.12.2017;

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(l) (F-110 G) Supplemental Deed of

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ORIGINAL APPLICATION NO.321 OF 2022

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Hypothecation dated 15.12.2017;

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(m) Supplementary Memorandum of deposit of Title deeds dated 15.12.2017;

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(n) Confirmation letters of Supplementary Memorandum of Deposit of Title deeds dated 15.12.2017;

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(o) Balance Confirmation letters dated 31.03.2017, 30.09.2017 and 03.10.2018.

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(5) After availing the loan, defendants did not adhere to the financial discipline and committed default in payment of instalments and repayment of the loan and accordingly the accounts of the borrowers were declared as Non-Performing Assets (N.P.A.) on 28.02.2019 as per RBI Guidelines. Therefore, on 13.09.2019, the applicant, through its advocate, called upon defendants to liquidate the outstanding as on 05.09.2019 in the sum of ₹27,09,995.35/under PC/PCFA Account, ₹1,76,62,053.02 UNDER

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DBPF/RDBF/RUBF/LABC direct bills Account and ₹3,31,766.92/under Current Account with further interest at the rate of 16% p.a. with monthly rest plus 2% p.a. additional interest due from 06.09.2019 till payment and/or realization within 1 week from receipt of this notice. Despite notice, defendant nos. 1 to 4 failed and neglected to pay.

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(6) As on 15.07.2020, there was owing, due and

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ORIGINAL APPLICATION NO.321 OF 2022

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payable by defendants to the applicant the aggregate sum of ₹2,32,16,183.26/- (Rupees Two Crores Thirty-Two Lakhs Sixteen Thousand One Hundred and Eighty-Three paisa Twenty-Six Only) with pendente lite and future interest payable @ 16% interest plus @ 2% monthly rest as an additional interest from 16.07.2020 monthly rest. The applicant has maintained the loan ledger extract and the entries posted therein are made in the usual and ordinary course of the banking business.

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(7) Since, defendants failed and neglected to make the payment, the applicant was left with no other alternate but to file the Original Application which was presented on 17.07.2020.

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(8) The applicant has filed affidavit (exhibit-6) in lieu of examination in chief of Mrs Vijayalaxmi Amit Bali, Senior Manager and list of documents (exhibit-7) thereby adducing in evidence the documents at Annexure-1 to Annexure-33, which are admitted in evidence, read, recorded and exhibited.

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(9) Accordingly, in the Original Application was filed for the recovery of ₹2,32,16,183.26/- (Rupees Two Crores Thirty-Two Lakhs Sixteen Thousand One Hundred and Eighty-Three paisa Twenty-Six Only) with pendente lite and future interest payable @ 16% interest plus @ 2% monthly rest as an

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ORIGINAL APPLICATION NO.321 OF 2022

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additional interest from 16.07.2020 monthly rest thereon from the date of presentation of the Original Application i.e. 17.07.2020 till payment/realisation.

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(10) As per Order sheet dated 07.02.2024, the Actual claim due will be ₹ 2,27,10,885.15/- (Rupees Two Crores Twenty-Seven Lakhs Ten Thousand Eight Hundred Eighty-Five and paisa Fifteen Only).

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(11) The Tribunal has scrutinised and examined the allegations contained in the Original Application and analysed the evidence adduced by the applicant which has gone unchallenged, uncontroverted and unrebutted.

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(12) Upon careful scrutiny and the examination of the Original Application, analysing the evidence and giving due weightage to the documentary evidence adduced by the applicant, the Tribunal views that there is no reason to disbelieve the claim made by the applicant bank.

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(13) In view of the observations made hereinabove, Original Application filed by the applicant deserves to be allowed.

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(14) Hence, the following order:

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ORDER

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(A) The Original Application No.321 of 2022 is allowed with costs.

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(B) Defendant no.1 through its directors Defendant nos.2 and 3 and Guarantor Defendant no.4 are

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Page 14 of 17

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ORIGINAL APPLICATION NO.321 OF 2022

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hereby ordered and directed to pay to the applicant, either jointly or severally, the aggregate sum of ₹2,27,10,885.15/- (Rupees Two Crores Twenty-Seven Lakhs Ten Thousand Eight Hundred Eighty-Five and paisa Fifteen Only) with pendente lite and future interest payable @ 12% per annum thereon from the date of presentation of the Original Application i.e. 17.07.2020 till payment/realization.

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(C) The aforesaid adjudicated amount is secured by the valid and subsisting hypothecated properties, that is, Stock of raw materials, work-in-progress, finished goods, Book-debts existing and furniture.

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(D) The aforesaid adjudicated amount is secured by the valid and subsisting mortgaged immovable properties, that is,

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Page 15 of 17

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ORIGINAL APPLICATION NO.321 OF 2022

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within the limits of Municipal Corporation of Greater Mumbai;

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(ii) Residential Flat No. 301 , adm. 920 Square Feet (Carpet area) on the Third Floor, of the B Wing & building known as "Madhupuri Apartments" situated at Gokhale Road. Dahanukar Wadi, Kandivali (W), Mumbai-400 067 and lying on the plot of land bearing Survey No. 81B (pt), CTS No. 1017 of Village: Kandivli, Taluka Borivali & District of Mumbai and Sub-District of Bandra, Mumbai within the limits of Municipal Corporation of Greater Mumbai.

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(E) Defendant no.1 through its directors Defendant nos.2 and 3 and Guarantor Defendant no.4 are entitled to redeem the mortgage as per law failing which the applicant has right to proceed to sell the mortgaged property and recover dues as per law.

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(F) The Applicant is also hereby directed to submit the details of claim amount received from the Central Government since the facility is granted under ECGC Scheme.

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(G) Issue Recovery Certificate.

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(H) The learned Registrar is directed to send a copy of the judgment and recovery certificate to (i) the

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Page 16 of 17

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ORIGINAL APPLICATION NO.321 OF 2022

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applicant, (ii) defendant and (iii) the Recovery Officer by post and email.

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Sd/-

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(Harish Kumar Kaushik)

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Presiding Officer, DRT-2, Mumbai

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Page 17 of 17

Indian Overseas Bank v. M/S Leo Star Impex Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Indian Overseas Bank v. M/S Leo Star Impex 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

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