Allowed

Pegasus Assets Reconstruction Pvt. Ltd. v. Vikas Chemical

DRT3 May 2025TA/144/2023

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal adjudicated a recovery application filed by Pegasus Assets Reconstruction Pvt.Ltd. (assignee of Allahabad Bank) against Vikas Chemicals. The court rejected defendants' defenses regarding blank documents, authorization, and limitation, and dismissed the counter-claim, holding the claim proven beyond reasonable doubt.

What did the court decide?

Direct the defendants to pay Rs.2,51,50,596/- with interest @8% p.a. within 30 days, recoverable from sale of assets or hypothecated/mortgaged properties.

Pegasus Assets Reconstruction Pvt. Ltd. versus… — Contract and Commercial Disputes | DRT (2025)

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T.A. No.144 of 2023

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Debts Recovery Tribunal-I, Delhi 4th floor, Jeevan Tara Building, Parliament Street, New Delhi

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Presiding Officer: Shri Govind Ballabh Sharma

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T.A. no.144 of 2023

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Pegasus Assets Reconstruction Pvt.Ltd. Plot No.P-2, Unit No.106,

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Best Business Park, Netaji Subhash Place Pitampura, Delhi-110034

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Applicant

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Versus

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Vikas Chemicals

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L-11, Kirti Nagar, New Delhi

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Sh.Sunil Kumar Batra s/o Sh.J.P.Batra

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Partners of Vikas Chemicals

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L-11, Kirti Nagar, New Delhi

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Sh.Lalit Kumar Batra s/o Sh.J.P.Batra L-11, Kirti Nagar, New Delhi

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Smt. Shanti Devi w/o Late Sh.Jatinder Prakash Batra (since deceased) R/o L-11, Kirti Nagar, New Delhi Through legal heirs & Representative:

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) Sunil Kumar Batra R/o B-3/14, Rajouri Garden Extn. New Delhi-110027

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Also at:

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L-11, Kirti Nagar, New Delhi

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i) Dr.Anil Kumar Batra R/o L-11, Second Floor Kirti Nagar, New Delhi

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ii) Lalit Kumar Batra R/o L-11, Ground Floor Kirti Nagar, New Delhi

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4v) Ravinder Kant Batra

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L-11, Kirti Nagar, New Delhi

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T.A. No.144 of 2023 Smt.Neha Batra L-11, Kirti Nagar, New Delhi
Ravindra Kant Batra L-11, Kirti Nagar, New Delhi
Smt.Neha Batra R/o L-11, Kirti Nagar, New Delhi
7. Shiatinder Prakash Batra Represented through legal heirs (i)Smt.Shanti Devi (since deceased) (ii)S.K.Batra (iii)R.K.Batra (iv)L.K.Batra (iv) Smt.Neha Batra
8. Smt.Kusum Batra
All the defendant no.7(i) to 7(v) and 8 At: L-11, Kirti Nagar, New Delhi Defendants
Present: Shri Dinkar Singh, Counsel for Applicant FI Shri Deepak Dhingra, for Defendants.
Date of Institution: 28.11.2008
Date of Pronouncement: 03.05.2025
FINAL ORDER This original application was filed by Allahabad Bank, who
assigned the debt to the present applicant for recovery from
defendant no.1 along with other defendants on 28.11.2008
through Shri Anil Kumar Yadav of Assignor Bank i.e. Allahabad
Bank, which has been replaced by Ms. Priyanka Narang,
authorized representative of the applicant FI under Section 19 of Recovery of Debts Due to Banks and Financial Institutions

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T.A. No.144 of 2023

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Act, 1993 against the defendants for recovery of

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Rs.2,51,50,596/- (Rupees Two Crores Fifty One Lacs Fifty Thousand Five Hundred Ninety Six only) as on 30.09.2008 together with pendentelite and future interest @ 8% interest per annum with quarterly rests from 01.10.2008 till its realization with costs. The Allahabad Bank (Assignor bank) had assigned the debt of defendant no.1 and others to the applicant FI as per Assignment Agreement dated 27.09.2013 and substituted as applicant under Section 5 of the SARFAESI Act 2002 in place of assignor bank to pursue the present application for recovery of dues.

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The brief facts of the case are that the applicant bank sanctioned Cash Credit facility of Rs.3.00 lacs, Overdraft limit of Rs.0.25 lac and Term Loan of Rs.1.12 lacs to defendant no.1 being partnership firm of defendant no. 2 and 3 for chemicals business on 23.01.1985. On the request of defendant no.1, the ,applicant bank enhanced the Cash Credit to Rs.13.00 lacs and Foreign Letter of Credit of Rs.20.00 lacs on 15.03.1989. It has further been submitted that the defendant no.1 availed Overdraft limit of Rs.41.25 lacs against FDRs of Rs.55.00 lacs on 04.09.1992 received from auction of imported goods by custom authorities which was enhanced to Rs.70.18 lacs in the year 1997. In addition, the defendant no.6 furnished additional

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5d--

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security in the shape of FDR of Rs.6,05,557/- as security to the loan sanctioned in favour of defendant no.1 and the defendant no.2 to 8 stood as guarantors to secure the credit facilities availed by defendant no.1. It has further been submitted that in order to avail the credit facilities, the defendants submitted loan applications and executed loan documents such as Letters of Sanctions 23.01.1985, 22.12.1986 & 15.03.1989, Deeds of Guarantees, Letter of Margin, Letter of Promise, Receipts, Deed of Hypothecation, Promissory Notes, Affidavit, Pronote, Undertakings, Pledge of FDRs, Letter of Margin and Letter of Confirmation of Balance on various dates between 23.01.1985 to 24.02.1986 and 25.01.1997.

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It has further been submitted that in order to secure the loan facilities availed by defendant no.1, the defendant no.4 created equitable mortgage of Property No.L-11, Kirti Nagar, New Delhi by handing over / depositing original title deeds of the property with the applicant bank on 23.01.1985, Supplemental Mortgage of property on 15.03.1989, confirming such mortgage from time to time and lastly confirmed vide letter dated 13.01.1997. It has further been submitted that the defendant no.4 being guarantor / mortgagor executed Recital dated 13.01.1997 to mortgage the property with applicant bank. In addition, the defendant no.8 and 5 created equitable

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mortgaged the land and property No.C-105, Kirti Nagar, New Delhi measuring 295.5/6 sq.yds. by handing over original title deed of the property to the applicant bank. It has been submitted by the applicant bank/FI that after availing the aforesaid loan facilities, the defendant no.1 neglected to regularize the account and defaulted in maintenance of account by various breaches and violation of terms and failed to maintain financial discipline with applicant bank/FI classified the account as NPA. The applicant bank/FI time and again requested the defendants for regularization of the account andto maintain financial discipline but neglected by the defendants and issued recall notice dated 21.07.2008 but defendant raised various false and flimsy disputes contrary to contract. Hence the applicant bank / FI has approached this tribunal for

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recovery of their dues.

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Notices of this O.A. were issued and defendant no. 4 (ii) filed their reply praying for application to the extent of Second Floor of mortgaged property be dismissed and restraining the applicant bank from selling/auctioning the same stating that application filed by applicant bank is defective as being legal heir of defendant no.7 who died on 04.04.1995 i.e. before filing the application and impleaded vide order dated 27.01.2014 i.e. after death of his mother i.e. defendant no.4 deliberately and

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intentionally for avoiding being exposed about creating of mortgage behind the back of defendant no.4. It has further been submitted that the defendant no.4 (ii) filed his reply limit to 2nd Floor of Property No.L-11, Kirti Nagar, Delhi and had filed objections in Probate proceedings filed by his brother defendant no.3 in respect of property before Hon'ble High Court of Delhi and is residing since 28 years and applicant bank not inquired from him at the time of mortgaging the property by his father and had contributed from his own funds pursuant to family settlement and construction/ development of said

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mortgaged property. Further, the applicant bank has another property no.C-105, Kirti Nagar, New Delhi of defendant no.8 for recovery from defendant no.1. It has further been submitted that that after the death of his father, the mortgaged property was devolved in the name of defendant no.4, mother of defendant no.4 (ii), who was a simple house wife and no knowledge of business floated by defendant no.2 and 3 who allegedly collusion with bank got execute mortgage documents in favour of applicant bank.

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In the written statement submitted on behalf of other defendants, it is submitted that the original application is barred by limitation as OD account was sanctioned in 1989 and closed vide letter dated 07.12.1992, the original application

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filed by Senior Manager is not a competent officer, power of Attorney as of 1984 defective, Allahabad Bank misused certain blank documents got signed from defendant no.5, Applicant Bank failed to act upon mandate and instructions to adjust the proceeds against OD Limit. It is submitted that bank cannot charge interest from the date when proceed to adjust the amount against OD limit was communicated and received from the answering defendant. It is submitted that the applicant bank concealed material particulars regarding litigation pending being Suit No.577/1993 filed by M/s Doriam Ltd against the applicant bank including defendant no.2 before Hon'ble High Court of Delhi. It is submitted that bank is guilty of creating various false entries of non-existing withdrawals and deposited have been made which defendant is not concerned and claim amount in application is false, fabricated and manipulated. The original application is misjoinder of parties in as much as defendant no.5, 6 and 8 are neither necessary nor proper parties as they have no role to play and not signed any documents.

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The applicant bank replied to submission of defendants and submits that application has been filed under Section 24 of RDDBFI Act 1993. Further, the defendant no.1 availed credit facilities since 23.01.1985 which were renewed / enhanced from time to time. In May 1991, defendant no.1 deposited 2

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FDR of Rs.55.00 lacs and availed OD limit of Rs.41.25 lacs which was enhanced to Rs.70.18 lacs on 25.01.1997 and defendant no.8 with defendant no.5 mortgaged the Property no.C-105, Kirti Nagar, New Delhi by depositing original title deeds and defendant no.1 mortgaged the property at L-11, Kirti Nagar, New Delhi owned by Smt.Shanti Devi Batra being guarantor vide letter dated 10.01.1997 to secure OD account, which was mortgaged in July 1987 for Cash credit facility availed by defendant no.1 duly acknowledged vide letters dated 30.03.2003 and 31.03.2003. It has further been submitted that the limitation will be computed under Article 62 of Limitation Act 1963 as OD is secured by FDRs but also by mortgage of two properties and claim is not barred by law of limitation. The original application has been filed by Senior Manager, Sh.Anil Kumar Yadav, duly authorized officer of bank to sign, file and verify the application and reply on behalf of bank and it is denied that bank fabricated the documents or misused blank documents of defendant no.5. It is submitted that bank is not related with the alleged transaction between M/s Doraim Ltd and the defendants and had been impleaded unnecessarily in the suit as bank only discharged its duty as defendants' banker and discharging its duty and approached Custom Authorities or RBI on behalf of defendant only. It is submitted that Allahabad bank has already filed written sd-

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statement to the alleged claim made by Doriam Ltd. and if any delay in payment, the same has been caused by the defendants as payment was not to be made by Bank. It has further been submitted that the bank is not aware or supposed to be known of bringing Rs.57.57 lacs deposited by the defendants from what account and for what purpose. It is denied that bank failed to adhere to the mandate given by the defendant or never ever asserted right to appropriate the FDR amount.

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The defendant no.4 challenged action under SARFAESI Act, 2002 therein admitted the dues and mortgage of property to secure the dues filed and filed writ petition No.7053/2010 which was dismissed on 25.10.2010 by the Hon'ble High Court. Thereafter, defendant no.4 filed SA No.542/2010 titled Shanti Devi Batra (Since deceased) through legal heirs Vs Pegasus Assets Reconstruction Co. Pvt.Ltd. against the SARFAESI action and admitted the liability in written submission on 27.01.2011.

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Further, the defendants also filed Counter Claim of Rs.10,61,452/- against applicant bank under Section 19 (6) and 19 (8) alongwith interest @18% interest per annum allowing entire amount of Rs.2,51,50,596/- to set off. It is submitted that defendant being SSI unit in the business of manufacturing of chemicals and lay special emphasis for promotion by Govt. of India and Ministry of Commerce received good response

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5d-

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from its buyers. Further, FDRs of respondent lying with applicant bank since 1992 and on account of omission and commission and gross negligence, misdeed etc. on the part of Allahabad Bank sustain huge financial losses which cannot be compensated by any means. It has further been submitted that the applicant bank holds no acknowledgement of any alleged liability of Rs.2,51,50,596/- and is hopelessly barred by time. It has further been submitted that OD limit was sanction in the year 1989 and there is no transaction and account was closed by defendant no.1 vide letter dated 07.12.1992 duly received and acknowledged by applicant bank asking to encash FDR No.222891/46/655 dated 20.10.1992 maturing on 03.12.1992 for Rs.40,55,452/- and credit the overdraft account and thereafter on many occasions and not disclosed in the present proceedings deliberately and intentionally. In addition, the bank charged higher rate of interest @15.75% from 05.08.1992 instead of @ 13.50% thereby charged extra interest of Rs.11364/- till 07.12.1992 which ultimately multiplied becoming huge sum and considering same interest rate on FDR, accrued interest on FDR would be Rs.2,11,56,596/- on 30.09.2008 with maturity of Rs.2,52,12,048/- which is still higher than the claim amount of

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the bank and the applicant bank despite several protest and letters by defendant have not paid the interest on other FDRs

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having face value of Rs.18,44,697/- and total value of these FDRs as on 30.09.2008 are Rs.1,19,60,997/- and the Allahabad Bank failed to encash FDR maturing on 03.12.1992 and credit ' in OD account with the FDRs and liable to reimburse entire FDR amount with same interest charged in Overdraft account compounding quarterly product basis which comes to Rs.2,11,56,659/- as on 30.09.2008 plus pendentelite and future interest apart from damages. It has been submitted that M/s Doraim Ltd. filed civil suit before High Court of Delhi being CS(OS) No.577/1993 against Allahabad Bank & Defendant no.1 along with India Craft claiming recovery of 516272 Deutsche Marks (equivalent to Rs.1.03 crores). It has further been submitted that due to dispute, Bank of Commercial & Credit International made the payment on account of Doriam to the banker of Dutch company by debited the account of Doriam for 419000 Deutsche Marks. It has further been submitted that custom authorities issued show cause notice to respondent no.2 and confiscated the goods with penalty and respondent no.2 filed application before High Court of Gujarat which directed release of goods and imposed conditions to approach Supreme Court of India by way of Civil appeal and Hon'ble Court on 03.08.1988 modified the order of High Court and directed for sole of goods by custom authority and deposited proceeds with Registrar of High Court of Gujarat and keep the

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amount in Nationalized Bank. It has further been submitted that the custom authorities sold the goods for Rs.138.00 lacs and after deducting Rs.8.00 lacs, deposited Rs.130.00 lacs with Registrar of High Court of Gujarat, Rs.59.57 lacs was refunded to respondent no.1 in May 1988. It has further been submitted that M/s Doriam filed Civil Suit No.577/1993 seeking decree for Deutsche Mark 516272 along with interest and as per replication, M/s Doriam asserted that Allahabad Bank under obligation to have returned the documents if same had not been rejected and alleged fraud against Allahabad Bank. It has further been submitted that Allahabad Bank is not entitled to claim alleged interest to be Rs.2,10,99,872/- but after adjusting accrued interest of Rs.2,11,56,659/- against FDR is liable to refund Rs.61,452/- and also refund the other FDRs lying as and when release order is passed by Hon'ble High Court of Delhi with interest and damages in favour of applicant firm. It is submitted that modus operandi adopted by the bank is not in conformity of RBI rules and regulation and contrary to provision of Negotiable Instrument Act 1881 and Indian Contract Act 1872. It has further been submitted that due to these actions, the defendant firm compelled to close the business and suffered losses amounting Rs.10.00 lacs and therefore, applicant claimed Rs.10,61,452/- from the applicant bank/FI which comes as difference of maturity value of FDR with

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interest charged on Overdraft account amount to Rs. 2,52,12,048/- plus Rs.10,00,000/- as Loss suffered amounting Rs.2,62,12,048/- due to negligence and omission of the bank minus amount of Rs.2,51,50,596/- claimed as per application by applicant bank.

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In reply to counter claim, the Allahabad bank denied the Counter Claim and submitted that the same is liable to be dismissed not to be taken on record. It is submitted the counter claim should be filed with written statement and as per provisions of Sub-Sections (5), (6) (7) & (8) of Section 19 of RDDBF Act 1993 which states: 19(5) The defendant shall at or before the first hearing or within such time as the Tribunal may permit, present a written statement of his defence. Therefore, it cannot be accepted and liable to be dismissed. Further, it is incorrect that the present case is subject matter of Civil Suit being C.S.(O.S.) 577/1993 filed by a creditor of defendant against the defendants nothing to do with present proceedings and the grounds taken are malafide and counter claim cannot be accepted by this Tribunal and no prejudice shall be caused to the applicant in the event the reliefs prayed for is granted. It has also been submitted that M/s Doriam filed Suit No.577/1993 before Hon'ble Delhi High Court for recovery of 516272 Deutsche Marks and on 09.03.1993, Respondent no.2

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gave undertaking that it would not encash the FDR which was thus got attached. Accordingly, it has been prayed for dismissal of the counter claim as well as the written statement of the defendants.

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In order to prove its case, the applicant bank I FI has submitted evidence way of affidavit of applicant bank and additional evidence by way of affidavit of Sh.Bishwa Ranjan Chatterjee on behalf of Pegasus Assets Reconstruction P.Ltd. and filed the original I copies documents and additional documents such as Power of Attorney, Mortgage Agreement, Affidavits of defendants, Recital letter, Margin Letter dated 24.12.1986, Sanction Letters, Letter for Continuing Guarantee dated 26.09.1988, Supplementary Agreement to Mortgage, Acknowledgement of Debt, Pronote, Hypothecation of stocks, Letter from Defendant no.2 to defendant no.1 for issuing FDR, Enhancement Letter, Amendment of OD limit Letter, Promissory Note, Sale Deed of Property at C-105, Kirti Nagar, Letter dated 18.01.1995 for deployment of Funds received from Gujarat High Court, Death Certificate with request dated 22.1.1997 for change of name in FDR, Letter to Mortgage of Property at Kirti Nagar, Recall Notice dated 21.07.2008, Replies to Notice of Recall, Copy of Plaint CS(OS) No.577 of 1993, Statement of Accounts and copy of Order Sheets in the matter Sd

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of CW58 & CM 96/93 marked as page no.1 to 341 and Board Resolution, Assignment Deed, Copy of Sale dated 11.11.1960, Letter of Hypothecation, Letter of Margin dated 30.09.1988, Request for Pledge of FDRs signed by Sh.L.K.Batra, Letter of NOC dated 26.09.1988 by Sh.J.P.Batra & Smt.Shanti Devi Batra, Letters of Margin, Deed of Guarantee by Ravi Kant Batra, Deed of Guarantee by Smt.Shanti Devi Batra, Pledge of FDR signed by Sh.L.K.Batra, NOC Letter dated 26.09.1988, Letter of Confirmation of Balance dated 25.05.1990 and Promissory Note marked as Exhibit AW-2/1 to Exhibit AW-2/10.

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Heard and perused the pleadings. Apparently, defendants have raised the objection that the applicant bank has got the signature of the defendants on blank documents while granting the loan facilities to the defendants. This Tribunal has gone through the documents which are duly filled and executed by the defendants and this Tribunal is of the view that plea of blank documents is no plea in the eyes of law as has been held by the Hon'ble Delhi High Court in the matter of "Indian Bank Vs. Cheese Wafers (India) Pvt. Ltd. It was held if the defendants have not filed any complaint before higher authorities of the bank or filed any complaint before police authorities, he will not be entitled to raise such plea at the later stage ". Thus, the plea of blank documents is not maintainable after filing of the suit and the same is rejected.

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The defendants have raised the objection that the present O.A. is not filed by the authorized officer, but on perusal of the case it is observed that the present O.A. has been filed by Shri Anil Kumar Yadav, the then Senior Manager and he was duly authorized by the applicant bank vide power of attorney dated 16.10.1984 issued by the then applicant bank. Therefore, the plea is not maintainable and the same is rejected.

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The defendants have also challenged the statement of account of the bank but this Tribunal is of the view that statement of account is duly certified under Section 4 of the Bankers Books of Evidences Act and the same cannot be challenged unless specific entry is pointed by the defendants. Hence, the said objection is not maintainable and the same is hereby rejected.

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Further, the defendants has also filed the counter claim wherein defendants have raised the objection that certain FDRs were lying with the applicant bank and the entire dues of the applicant bank could have been achieved by adjusting these FDRs, but the applicant bank has failed to adjust certain FDRs. However, it has been argued on behalf of the applicant bank that M/s Doriam had filed Suit No.577/1993 before Hon'ble Delhi High Court for recovery of 516272 Deutsche Marks and on 09.03.1993 and the defendant no.3 herself gave c/ —

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undertaking before the High Court that it would not encash the FDR, which was thus got attached. Thus, in such like situation, it cannot be said that the applicant bank could not adjust the FDRs and thus the said objection as well as counter claim is also not sustainable. It has also been submitted on behalf of the respondent FI that the defendants stopped availing Cash Credit facility but utilized Overdraft limit and expressed their willingness to mortgage the property in question owned by Smt.Shanti Devi Batra vide letter dated 10.01.1997 to secure the liability arising from Overdraft account and accordingly, the title deed of property in question was deposited with bank by creating mortgage on 28.07.1983 for Cash Credit limit availed by respondent no.2 and Smt.Shanti Devi Batra also made it evident vide letter dated 13.01.1997 that property would ensure towards the overdraft facility.

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The witness of the applicant bank has fully corroborated the averments made in this O.A. The evidence lead by the applicant bank which consists of mainly written / typed documents has gone unchallenged and there is no question of disbelieving the same based upon the documents. This Tribunal has also observed that not an iota evidence/documents has been led by the defendants against the claim of the applicant bank and has made only submission on fact as stated in the written statement evidence. In the civil

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proceedings it cardinal principle, that whosoever alleges a fact he/she has to prove in the court of law by leading evidence mere assertion are not sufficient and nowhere defendants have

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denied about the availment of the loan.

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In view of the above facts and circumstances, this

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Tribunal is of the view that the defendants have failed to

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convince this Tribunal and this Tribunal do not find any merit

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and reject the contentions of the defendants as baseless. I

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hereby allow this O.A. as the applicant bank has proved its

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claim beyond reasonable doubt.

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In the light of the above discussions, the Original

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Application deserves to be allowed.

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ORDER

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(I) I , allow this OA and direct the defendants no.1 and 8,

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jointly or severally, to pay to the applicant bank, within a period of 30 days, a sum of Rs.2,51,50,596/- (Rupees Two Crores Fifty

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One Lacs Fifty Thousand Five Hundred Ninety Six only) as on

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30.09.2008 together with pendentelite and future interest

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@8% interest per annum with quarterly rests from 01.10.2008

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till the date of realization failing which the aforesaid amount

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shall be recovered from the sale of hypothecated assets and current assets and mortgaged property bearing No.L-11, Kirti Nagar, New Delhi and C-1051 Kirti Nagar, Delhi. The applicant 5d-

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bank may appropriate the Fixed Deposits kept against the dues of defendant no.1 as per the outcome of the matter of CS No.577/1993 filed by Doraim Vs Allahabad Bank and defendant

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