Allowed

ORBC0100165 v. 5XL Screen Print

DRT31 Jan 2025TA/156/2023

Case brief

AI extract

What is this about?

The Tribunal allowed an Original Application filed by Punjab National Bank for recovery of loan dues. The bank proved the outstanding amount of Rs.43,72,264.02 plus interest through affidavit evidence. With defendants being ex-parte, the claim was unchallenged, and the Tribunal passed a final order directing recovery.

What did the court decide?

Recovery of Rs.43,72,264.02 plus interest at 13.75% p.a.; liberty to sell defendant assets.

ORBC0100165 versus 5XL Screen Print — Banking and Recovery | DRT (2025)

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TA No.156/2023 (E)

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31.01.2025

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 31^st day of January, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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TRANSFERRED APPLICATION No. 156 of 2023

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(Originally filed before DRT-II, Chennai as OA 238/2019 and thereafter transferred to this Tribunal and renumbered as TA No. 156 of 2023)

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*Punjab National Bank (Erstwhile Oriental National Bank) Resolution, Recovery &Law 1^st Floor, Spencer Plaza,769 Anna Salai, Chennai - 600 002

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…. Applicant

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Amended vide order in IA No.337/22 dated 18.02.2021 in view of merger.

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-Vs-

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M/s.5XL Screen Print Represented by its Partners A. Sunil Rao & C.S. Ramesh

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No.1A, Subramanian Salai

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Swaminathan Nagar Kottivakam, Chennai 600 041

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A. Sunil Rao No.4B, DG1 layout, Blossom Avenue Kottivakam, Chennai - 600 041

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C.S Ramesh W-745, Park Road Anna Nagar West Extension Chennai - 600 101 …. Defendants

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Counsels on record / appeared:

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Counsel for Applicant Bank

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: Sh. P. Reghu Raja

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Defendants were set ex-parte on 09.08.2019.

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: - FINAL ORDER - :

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This original application is filed on 05.01.2019 by Erstwhile Oriental Bank of

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TA No.156/2023 (E)

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31.01.2025

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Commerce, since merged with Punjab National Bank, under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 (formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the defendants, personally and also jointly and severally, for recovery of a sum of Rs.43,72,264.02p (Rupees FortyThree Lakhs Seventy-Two Thousand Two-Hundred Sixty-Four and Two Paise) due in respect of Cash Credit Facility (Loan Account No.01654011001014) together with further interest @ 13.75% per annum with monthly rests from the date of application till the date of realization in full and for costs of this application.

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Originally the application was filed before DRT-II, Chennai, assigned OA No.248/2019, and thereafter in pursuance to the notification from Ministry of Finance, DFS, dated 04.10.2022, OA No. 248/2021 stood transferred to this Tribunal and renumbered as TA No.156/2023.

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Brief Facts of the case:

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The Applicant submits that the application is filed within the period of limitation as prescribed under Section 24 of the Recovery of Debts and Bankruptcy Act, 1993, and the subject recovery claim falls within the jurisdiction of this Hon’ble Tribunal.

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The applicant bank's case is that the 1st defendant, represented by its partners approached the applicant bank for seeking credit facilities.

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It is submitted that upon request of 1^st defendant, a partnership firm, represented by its partners viz., 2^nd and 3^rd defendants herein approached applicant bank for seeking finance assistance for business purpose. Applicant bank

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TA No.156/2023 (E)

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31.01.2025

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considering the said request, had sanctioned Cash Credit facility to the tune of Rs. 40,00,000/-, Term Loan facility in a sum of Rs.55,00,000/- and Letter of credit facility in a sum of Rs.55,00,000/- vide Sanction Letter dated 16.08.2011.

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The applicant bank submits that upon availing of the credit facilities, 1^st defendant represented by 2^nd and 3^rd defendants executed the loan and security documents in favour of applicant bank. Additionally, the 2^nd and 3^rd defendants had personally guaranteed the repayment of the loan along with interest, on behalf of the 1^st defendant.

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It is submitted by applicant bank that loan is repayable at the rate of 13.75% p.a. with monthly rests in accordance to RBI guidelines.

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It is further submitted that at the time of availing the credit facilities, the defendants executed the following documents on 17.08.2011 in favour of applicant bank:

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a) Agreement of Term Loan.

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b) Common Agreement.

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c) Agreement of Hypothecation of Assets

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d) Agreement of Guarantee(D2)

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e) Agreement of Guarantee(D3)

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f) Partnership letter, undertaking & declaration

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g) Affidavit of Sunil Rao – D-2

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h) Affidavit of C S Ramesh – D-3

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TA No.156/2023 (E)

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31.01.2025

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It is submitted by applicant bank that the 1^st defendant hypothecated the movable assets, present and in future by executing the Agreement for hypothecation of movables dated 17.08.2011 in favour of applicant bank.

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It is further submitted by the applicant bank that, at the request of the 1^st defendant, represented by its Partners, the Cash Credit facility and Term Loan facility was renewed on three occasions viz., 07.02.2014, 31.12.2015 and finally on 29.01.2016. The 1^st defendant had also executed Balance and Security Confirmation letters dated 20.08.2015, 19.01.2016, and 29.01.2016 respectively.

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The Applicant Bank submits that defendants, after availing the sanctioned credit facilities, violated the terms of the sanction, including the repayment schedule, and defaulted on the repayment of the loan despite repeated reminders. Consequently, the loan account was classified as a Non-Performing Asset (NPA) on 29.04.2018. Despite the default and persistent non-compliance, the defendants failed to respond positively and settle the dues. As on 31.10.2018, the total principal and interest payable had accumulated to Rs.38,71,186.02/-, with MOI amounting to Rs.5,01,078/-. Therefore, the Applicant Bank has filed this Original Application (OA) seeking recovery of the outstanding dues from the Defendant.

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After the filing of the OA, summons were sent to the defendants through Registered Post with Acknowledgment Due, which was returned unserved with postal endorsement as ‘Left’. Applicant bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 09.08.2019 even after giving sufficient time, there was no appearance or representation from the defendants.

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TA No.156/2023 (E)

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31.01.2025

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Hence, defendants were placed ex-parte on 09.08.2019.

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I.A No.1566/2023 was filed by the applicant bank to eschew the proof affidavit dated 10.10.2019 filed through Sh. S.Dhayalan, Asst. Manager, on behalf of applicant bank while seeking permission to file fresh PA of the present incumbent. I.A was allowed on 22.11.2023 and the proof affidavit of Sh. Mahendran, Chief Manager, Anna Salai Branch of the applicant bank was taken on record.

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Heard the submissions of Applicant Bank and perused the records.

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To prove the case of the Applicant Bank, Sh. Mahendran, Chief Manager, Anna Salai Branch, has filed his Affidavit by way of evidence and same was considered as evidence of AW-1 and list of documents came to be marked as Ex A-1 to A-15. As the defendants remained ex-parte, the OA claim remains unchallenged. There is no contra evidence available on record to repudiate the claim of the Applicant Bank.

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With regard to the amount due to the applicant bank, the interest applied, the conduct and operations in the account and the default committed, this Tribunal comes to the conclusion that the applicant bank is entitled for a final order on the following terms:

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: O R D E R:

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The OA is allowed with costs,

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(a) The applicant bank is allowed to recover from Defendants No.1 to 3 jointly, severally a sum of Rs.43,72,264.02/- (Rupees Forty-Three Lakhs Seventy-Two Thousand Two-Hundred Sixty-Four and Two

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TA No.156/2023 (E)

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31.01.2025

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Paise) due in respect of Cash Credit Facility (Loan Account No.01654011001014) together with further interest @ 13.75% per annum with monthly rests from the date of filing this application till the date of realization.

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(b) The applicant bank is at liberty to sell the personal assets of the defendants (both movable and immovable) to recover the dues as required under law;

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(c) The applicant bank shall file the latest memo of calculation of OA amount together with interest, costs etc., to be paid by the defendants duly considering the amounts, if any, paid by the defendants and/or amount realized by sale of assets etc., during the intervening period after the filing of the OA, enabling the Registry to prepare Recovery Certificate for the amount to be paid by defendants to the applicant bank.

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(d) The applicant bank shall file memo of costs within ten days from the date of this final order.

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(e) Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

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A copy of this order be communicated to the parties concerned.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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(Dictated to Prasobh Sankar, transcribed by him, corrected, signed and pronounced by me on this the 31^st day of January, 2025)

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TA No.156/2023 (E)

31.01.2025

ANNEXURES

WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Sri. Mahendran, Chief Manager of the applicant bank.

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Exhibits on the part of the Applicant:

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Sl. No.	Description of Documents	Exhibit No.
1	Sanction letterdated16.08.2011	A-1
2	Agreement ofterm loandated17.08.2011	A-2
3	Commonagreement dated17.08.2011	A-3
4	Agreement of hypothecationofassets dated17.08.2011	A-4
5	Agreement ofguarantee dated (D2)17.08.2011	A-5
6	Agreement ofguarantee dated (D3)17.08.2011	A-6
7	Partnership letter, undertaking & Declaration dated 17.08.2011	A-7
8	Affidavit ofSunil Rao	A-8
9	Affidavit of C.S. Ramesh	A-9
10	Sanction letterdated 07.02.2014	A-10
11	Balance & Security Confirmation dated 20.08.2015	A-11
12	Loanapplicationdated20.12.2015	A-12
13	Sanction letterdated 31.12.2015	A-13
14	Balance and SecurityConfirmation dated 30.01.2016	A-14
15	Statement of Account & Bankers Certificate dated 27.11.2018	A-15

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Witness Examined for the Defendant: -Nil-

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List of Documents Exhibited for the Defendant: -Nil -

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SCHEDULE

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Hypothecation of Stocks and Receivables.

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Sd/-

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(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

ORBC0100165 v. 5XL Screen Print

Case brief

What is this about?

What did the court decide?

ORBC0100165 v. 5XL Screen Print

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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