BANK OF BARODA vs M/S VIDYA ELECTROTECH PVT LTD on 21 September 2026

FINAL ORDER

This original application has been filed by the applicant bank, on 03.03.2015 through tv'lr. L.R. Choudhary, Assistance General Manager of the applicant under Section 19 of the RDB Act, 1993 against the defendants for recovery of a sum of Rs.3,85,26,097.48 with pendent-lite and future interest compounded monthly from date of filing of this O.A. till the realization in full.

2. The brief facts of the case are that at the request of defendant no.1, the appl(qnt bank sanctioned a e)"'

TANO|2065/2023 2 Term Loan Facility of Rs.230 Lacs and Cash Credit Facility of Rs.70 Lacs- Total of Rs.300 Lacs, vide sanction letter dated 06.07.2009. The said facilities were inter-alia to be secured by hypothecation of plant and machineries (for term loan), hypothecation of stocks and book-debts (for cash credit facility) and by equitable mortgage of the immovable propefties belonging to defendant nos.6 & 7 i.e., B-lVlt}4, ELDECO Golf View Apaftment, Plot No.5, P-2, Sector- Omega, Greater Noida, Up and the property namely apartment No. 1103, l1u Floor, Tower No.3, Unitech Heights, Plot No.GH-O5, Sector-Chi-03, Greater Noida (UP) belonging to defendant no.4. The defendant nos.1,2 and 4 executed all necessary loaning documents on 15.07.2009. In consideration of the aforesaid facilities, the defendant nos.2 to 6 and Smt. Anu Malhan stood as guarantors dated 15.07.2009. The defendant no.10 stood as corporate guarantor dated 15.07.2009. Again, at the request of defendant no.1, the applicant bank revised credit facilities i.e., Cash Credit of Rs.70.00 lacs, Term Loan of Rs.230.00 Lacs and Non-Fund Based (FLC) of Rs.100 Lacs- Total of Rs.400 Lacs, vide sanction letter dated 02.02.2010. The defendants executed all necessary loaning documents on 03.02.2010. Again, at the request of defendant no.1, the applicant bank sanctioned a Car Loan Facility of Rs.18,71,1631-, vide sanction letter dated 07.05.2010. The defendant no.l executed all necessary loaning documents on 08.05.2010. Again, at the request of defendant no.1, the applicant bank revised credit facilites i.e., Cash Credit of Rs.125 Lacs, Term Loan-I of Rs.171.18 Lacs, Term Loan-II (Car Loan) of Rs.15.59 lacs and Non-Fund Based (FLC) of Rs.100 Lacs, vide sanction letter dated 15.04.2011. The defendant no.1 e;

TANOl2065l2023 3 executed all necessary loaning documents on 20.04.20tL. Again, at the request of defendant no.1, the applicant bank sanctioned a Temporary Overdraft Limit Facility of Rs.25,00,000/-, vide sanction letter dated 02.08.2011. The defendant nos.2 to 6 and defendant no.7 in their individual capacities, executed in favour of the applicant bank, a general form of guarantee. The defendant no.10 company stood as corporate guarantor dated 02.08.2011. Again, at the request of defendant no.1, the applicant bank revised an aforesaid credit facility i.e., Cash Credit of Rs.225 Lacs, Term Loan-I of Rs.79.18 Lacs, Term Loan-II (Car Loan) of Rs.8.11 Lacs, Non-Fund Based (FLC/ILC) of Rs.200 Lacs and Forward Booking of FC of Rs.10.00 Lacs- Total of Rs.522.29 Lacs, vide sanction letter dated 17.04.20t3. The defendants executed all necessary loaning documents on 27.M.2013. The defendant nos.2 to 9 stood as guarantors and defendant no.10 stood as corporate guarantor. In Further consideration of grant of the said facilities, the defendant no.2 created the mortgage by physical delivery of title deeds of his immovable property viz., Property being entire basement along with servant quarter on the top terrace with 12olo undivided and indivisible rights in the freehold land admeasuring 300 sq. yds of Plot No. 5-120, Greater Kailash-Il, New Delhi.

3. It is further submitted that the defendants enjoyed and utilized the Loan facility, but failed to maintain the financial discipline and failed to repay the due amounts. The applicant requested the defendants to regularize the loan account by visits and letters, but there was no response from the defendants. Hence, the account was classified ?s_ryIA dated 31.08.2014. The gA..

TANOl2065l2023 4 applicant bank served a demand notice dated 01.11.2014 to the defendants but failed to recover the same Thus, the present O.Aff.A. is preferred by the applicant bank to recover its dues.

4. On notice by this Tribunal, the defendants put appearance through counsel and Rled written statement. The defendant no.5 has filed evidence.

5. In their written statement the defendant nos.5,6,7 & 10 have denied the facts mentioned in the OA. It is submitted that the defendant no. 5 and the defendant no. 6 are shareholders and directors in the defendant no. 10 company. The defendant no. 10 Company prior to 18.04.2013 had owned 2,06,0001- equity shares in the defendant no. 1 company. The defendant no. 1 company, at the said time had an authorized share capital of 55 Lacs divided into 5,50,000/- equity shares. Therefore, the defendant no. 10 company owned 40.49o/o of the shareholding of the defendant no. 1 company. This shareholding has now been obtained by the defendant no. 2 with the approval and consent of the defendant nos. 1 and 3. Therefore, now there is no equitable interest of the defendants in the defendant no. 1 company. The shareholding allotted to the defendant no. 10 Company rnias the shareholding at the time of incorporation of the defendant no. 1 society. However, the defendant nos. 2, 3 and 4 used to manage and operate the functioning of the defendant no. 1 company. Initially, the defendant no. 10 company had invested in the defendant no. 1 company in order to provide synergy to the business operation of the defendant no. 10 company. However, with passage of time, it was evident that _the_defendant nos. 2, 3 and 4 EA

TANO/206512023 5 were siphoning off the assets, monies in Bank Account as well as stock, plans and machineries of the defendant no. 1 company. It is submitted that the defendants were also shocked to learn that the officials of the applicant bank were directly involved in the illegal and criminal design of siphoning off assets, monies in Bank Account etc. Initially, the defendants made several representations to the bank officials to examine this position and to take protective steps in the interest of the bank as well as the guarantors. Surprisingly, there was no action from the bank officials. It is further submitted that the defendants that is more particularly the defendant nos. 5, 6 and 10 had expressed their no confidence to the defendant nos. 2, 3 & 4 as well as the defendant no. 1 in the operations of the defendant no. 1. In all these discussions, the officials of the applicant bank were present. In these discussions, the specific position which was agreed by all concerned including the applicant bank was that the guarantees executed by the defendants as well as the mortgaged property being property situated at apartment No. B- IV/104, ELDECO. Golf Apartment, Greater Noida, Uttar Pradesh would be released from the guarantee or release the property as a collateral security. The shares already allotted to the defendant no. 10 company would be released in favour of the defendant no. 2 without any consideration. Although, the discussions had taken place prior to 17.04.2013, the bank officials of the applicant bank had assured that the execution of the documents between the defendant nos. 5, 6 and 10 in favour of the defendant no. 2 would ensure release of their guarantee as well as would ensure that the property would also be released from the said guarantee. However, the bank officials as well as the defendant nos. 2, 3 & 4 stated d TANOl2065l2023 6 that prior to the execution of the said documents. a final guarantee document be o<ecuted on 17.04.2013 so that a Ume period may be gained for stabilizing the affairs of the defendant no. 1 company and regularizing the loan. Only thereafter the defendant an exit from the guarantee and the property be release from the collateral security. At that point of time, Mr. Rajeev Batra and Mrs. Anu Malhan (wife of Defendant No. 4) were guarantors to the said loan. Mr. Rajeev Batra heads a very large consoftium of companies and he is presently worth more than Rs.1200 Crores. At the time, the defendants extended the guarantee in terms of the sanction letter dated L7.04.2013, the defendants were informed by everyone including the applicant bank that these persons were also extending their guarantees. In fact, the sanction letter dated L7.04.2013 specifically mentioned that the facilities were secured by the personal guarantees of the said persons also. In view of the security provided by extension of personal guarantees by Mr. Rajeev Batra and Mrs. Anu Malhan, the defendants agreed to extend guarantees to the financial facilities extended to the defendant no. 1 Company. It is submitted that much prior to the extension, the defendants had expressed their no confidence and had erpressed their desire for withdrawal of their guarantees to the financial facilities made availabb to the defendant no. 1 Company. The only reason why the defendants gave the said guarantees was due to the presence of the aforesaid persons as guarantors. However, there was a deep- rooted conspiracy to defraud the defendanb. The officials of the applicant bank, entered into a deep- rooted conspiracy with the defendant nos. I to 4 to withdraw the guarantees of Mr. Rajeev Batra and <-\

TANO/2065/2023 7 another guarantor. In pursuance of this conspiracy, the officials of the applicant bank and the defendant nos. 1 to 4 never took steps for completing the formalities of the guarantee. It is submitted that in the Original Application at paragraph 5.9 [Page 12] the applicant bank has now stated that the guarantee of Mr. Rajeev Batra was waived. Further, the Bank Officials had gone back on the mutually acceptable understanding that the guarantees/security of the defendants would be withdrawn. This was a clear case of fraud and dishonesty by the officials of the original applicant bank and the defendants nos. 1 to 4. The fact remains that the 'waiving' of the guarantee of the aforesaid persons is a fundamental change to the terms of the loan and the guarantee document. Accordingly, there is a clear case of discharge of guarantee of the defendants in relation to the facilities granted by the Original Applicant Bank in favour of the defendant no. 1 company. Apart from the above, in fact also, there has been a discharge ofthe guarantee by the applicant bank of the defendants and that there is a discharge of the collateral security i.e., situated at apartment No. B- IVlL04, ELDECO, Golf Apartment Greater Noida, Uttar Pradesh. After the sanction dated 17.04.2013, the defendant no. 1. defendant no. 2, the defendant no. 4 and the defendant no. 10 executed a share purchase agreement dated 18.04.2013 in relation to the shares held by the defendant no. 10 company in the defendant no. 1. By viftue of this agreement all the shares will be purchased by the defendant no. 2 and the defendant no. 3 stood guarantee of the entire transaction. In the said Share Purchase Agreement, the defendant nos. 1, 2 and 3 specifically undeftook to repay all loans already existing against the !.!Q__property i.e., B-IVlL04, 9,\

TANOl2065l2023 8 ELDECO, Golf Apartment, Greater Noida, Uttar Pradesh) and also discharge the guarantee of the defendants from the applicant bank. The share purchase agreement was also supported by an Escrow Agreement dated 18.04.2013. The said documents have already been placed by the defendants with the applicant bank and there is an in-principle approval of the said transaction by the said applicant bank. Therefore, without prejudice to the fact that there is a discharge of the guarantee of the defendants by operation of law, in the present case there is an actual discharge of liability of the defendants. The share purchase agreement referred to above clearly shows that there is no more liability on the part of the defendant in relation to the financial facilities made available by the applicant bank to the defendant no. 1 company. After execution of the aforesaid documents, the defendant nos. 5,6 and 7 had met the officials of the applicant bank as well as the defendant nos. 1 and

2. In terms of the said share purchase agreement, the defendant nos.l, 2 and 3 had to discharge the guarantees and released the collateral within a particularly fixed time. However, the said defendants deliberately, willfully and fraudulently failed to comply with the same. Accordingly, various requests were made. The aforesaid defendants failed to comply with the same. Accordingly, on 14.11.2013 a lefter was sent to the Escrow agent about such failure. On 15.11.2013, the Escrow agent directed the aforementioned defendants to comply with the share purchase agreement. The due to the continuous, willful and illegal default of the defendant Nos. 1,2 and 3, the defendants were left with no option but to ensure that the applicant bank give shape and imp!5:ment the understanding cx TANO/206512023 9 arrived at between all concern including the applicant bank to discharge the defendants as stipulated in the share purchase agreement. Several meetings took place that the office of Mr. H.S. Sharma, DGM, Bank of Baroda. Formal correspondences were also exchanged. On 23.06.2014, the defendant nos. 5 and 6 wrote letters to the applicant bank. The Original applicant bank vides 2 separate letters both dated 25.06.2014 had refused to discharge the personal guarantees of the defendants as well as released the LIC Policies. On 27.06.2014, the defendant no. 10 company again pointed out the various defaults of the defendant nos. 1, 2, 3 and 4 and requested them to comply with the share purchase agreement or in the alternative resolved the dispute in an amicable manner within a period of 7 days. The defendant no. I Company had replied to the said request stating therein that they had defaulted in the compliance of the share purchase agreement. They also did not provide any specific reason for their failure to comply with the same. During this entire period, the defendants had on several occasion had pointed out that the defendant nos. 1 to 4 has siphoned off assets, monies in bank accounts, stocks, plants and machineries and are avoiding making payment of the credit facilities given by the applicant bank. In these illegal and criminal acts, the officials of the applicant bank had supported/overlooked the acts of the defendant nos. 1 to 4 for a considerable period of time. Due to the persistence of the defendants, the applicant bank had only written letters pointing out these glaring illegal and criminal acts to the defendant nos. 1 to 4. The first of such letter were issued on 20.03.20t4 and thereafter on 16.05.2014. However, no action was taken. Thereafter, in a regular course, the 4,{

TANO/2065/2023 10 applicant bank issued a letter dated 28.08.2014 pointing out these facts to the defendant nos. 1 to 4 only. The continuous overlooking of such glaring and illegal acts clearly shows that the applicant bank's officials were pafi in such siphoning off etc. It is further submitted that in the meantime, on 04.08.2014 the defendant no. 1 Company wrote a letter to the applicant bank seeking permission to sell the property at 5-120, Greater Kailash, Part-II, New Delhi and thereby release the security as well as the guarantee by the defendants. A similar, letter dated 14.08.2014 was also issued in this regard. In response to the said request, the applicant bank wrote a letter dated 12.09.2014 granting no objection for the sale of the said property. However, there was no response in relation to the discharge of security and guarantee of the defendants. Accordingly, on 22.09.2014, the defendant nos. 5, 6 and 10 wrote separate letters in this regard. It is submitted that the applicant bank vide lefter dated 08.10.2014 had responded to the letters dated 22.09.2014 and stated that all the outstanding dues have to be cleared for release of guarantee and security. This conduct of the applicant bank contains to the well accepted position that they would officially and formally execute documents discharging the guarantee/security of the defendants. Apart from the aforesaid, even after filing of the Original Application, the applicant bank has dishonestly and illegal permitted the defendant nos. 1 to 4 to siphon off assets, machineries, plants and stocks in the garb of 'shifting' offices and factory premises. It is submitted that the answering defendant's security and guarantee was discharged by the applicant bank due to a signiflcant change in the contractual terms. The guarantee and the securlty-urere therefore, discharged (A

TANOl206sl2023 ll by operation of law. Further, the facts clearly establish that the guarantee and security were in fact discharged by the applicant bank. The dishonest and illegal conduct of the officials of the applicant bank ensured that although there was in fact a discharge, the same was not implemented by the applicant bank. Fufther, the conduct of the defendant nos. 1 to 4 and the officials of the applicant bank clearly show that the defendants cannot be made liable as a guarantor for such cases of siphoning off etc. by the said defendants. An action which is so tainted with illegalities and criminalities cannot be the basis of arraigning any liability on the defendants. It is prayed to issue a certificate for recovery ofsum of Rs.21 Lacs in favour of D-5 and against the applicant bank with interest @L2o/o p.a. compounded annually from the date of sale of the LIC policies till date of filing the present counter claim. The Ld. Counsel for defendant no.5 has relied upon the Judgment of Hontle High Court of Delhi in the Matter of M/s. Century Metals Ltd Vs Industrial Finance Corp, of India & Ors., Judgment of the Honble Apex Court of in Punjab National Bank Vs Satinder Kumar Chopra & Anr.2009 SCC Ontine Del 3136 : (2010) 166 DLT 535, Judgment of the Hontle DRAT - Delhi in MMTC Ltd Vs Surjit Singh Kanda & Ors. in (2011) BC62 (DRAT) and Judgement of Honble Apex Couft in C.K. Sasankan Vs Dhanalakshmi Bank Ltd. Civil Appeal No. 1317 of 2009.

6. The applicant bank and defendant no.5 have filed their respective evidence.

7. Heard the Ld. Counsel of applicant bank and defendant no.5 and perused the record and also perused the written submission filed by the applicant bank and defendant no.5. g)..

TANOl2065l2023 12

8. The first contention of the Ld. counsel of the defendant no.5 is that this Tribunal has no jurisdiction to entertain the present TA. It is submitted that no cause of action has arisen within the territorial jurisdiction of this Tribunal as the loan was sanctioned from Noida Branch of the bank, the loan documents were executed in Noida Branch, the undertaking was also executed at Noida Branch, the letter was issued by the Greater Noida Authority and the title deeds of the property were deposited at Noida, the supplementary composite agreement was also executed at Noida, the demand promissory note was also executed at Noida, the sanction letter dated 15.01.2011, 17.04.2013 were issued from Noida, Board resolution dated 25.04.2013 was passed at Noida, the demand promissory note datd 27.04.2013, letter of continuity, security dated 27.04.20t3 and supplementary composite agreement all were issued from Noida, declaration of the mortgage of deposit of title deed, undertaking have been executed at Noida, the bank has issued letter to the company from the Noida Branch, the demand notice was also issued from Noida, the properties were also situated at Noida, the notce under Section 13(2) ofthe SARFAESI Act issued from Noida branch regarding the properties situated at Noida and therefore, all the cause of action has arisen at Noida and therefore, the Tribunal has no jurisdiction to entertain the present TA. The defendant no.5 has himself admitted in the para no.1 of the written submission filed on 19.09.2026 that the OA has been filed on the basis that one of the mortgaged property bearing no. 5-120, Greater Kailash Part-II, New Delhi is mortgaged and the defendant no.1 passed a resolution dated 06.02.2009 and 08.05.2010 by holding meeting of Board of Directors at Greater 9-r)

TANOl206s/2023 13 Kailash, New Delhi and that the defendant no.5 & 9 are resident of Delhi and defendant no.l company has its registered office at Delhi. From perusal of the Section 19 of the RDB Act it is clear that the application under Section 19 of the RDB Act can be filed where the branch of the bank is situated, the defendant or any of the defendant actually resides or carries on business or a cause of action wholly or in part arises. Admittedly, the defendant no.5 and 9 and defendant no.l are residing and carrying on business at Delhi, therefore, this Tribunal has jurisdiction to entertain the present OAffA as per provisions contained under Section 19 (b) ofthe RDB Act. More over one of the mortgage property is situated within the jurisdiction of this Tribunal and therefore, part of cause of action has arisen within the jurisdiction of this Tribunal and therefore, this Tribunal has jurisdiction to entertain the present OAffA. Therefore, the contention of the defendant has no force.

9. The next contention of the Ld. counsel of the defendant is that the applicant bank is claiming exorbitant rate of interest, therefore, the interest rate should be adjudicated by the Tribunal and defendants may be directed to pay the entire dues along with the interest rate adjudicated by the Tribunal. The Ld. counsel of the defendant relied upon the judgement passed by the Hontle High Court of Delhi in M/s. Century Metals Ltd Vs Industrial Finance Corp. of India & Ors., Judgment of the Honble Apex Court of in Punjab National Bank Vs Satinder Kumar Chopra & Anr. 2009 SCC Ontine Del3136 : (2010) 166 DLT 535, Judgment of the Honble DRAT - Delhi in MMTC Ltd Vs Surjit Singh Kanda & Ors. in (2011) BC62 (DRAT) and Judgement of 'I

TANO/2065/2023 14 Hon'ble Apex Couft in C.K. Sasankan Vs. Dhana- lakshmi Bank Ltd. Civil Appeal No. 1317 of 2009. On the other hand the Ld. counsel for the applicant bank has submitted that the defendants are carrying on the business and therefore, they must be directed to pay the agreed rate of interest on the dues. It is submitted that the applicant bank is charging the rate of interest as agreed between the parties and the interest cannot be said to be exorbitant. In this regard I have perused the record and also gone through the provisions contained under Section 19(20) ofthe RDB Act and the judgement passed by the Hontle Supreme Court and the Honble High Court. As per provisions contained under Section 19(20) of the RDB Act, the Tribunal can decide the rate of interest which has to be paid to the banks and financial institutions. In the present matter the loan has been taken for running a business and the defendants being a businessman has agreed to take the loan on such terms and conditions which are acceptable to both the parties. The applicant bank is claiming the same rate of interest as agreed between the parties. Therefore, the contention of the defendant that the applicant is charging exorbitant rate of interest cannot be accepted. The banks are holding public money and therefore, the contention of the defendant that the interest should be reduced to 60/o cannot be accepted. In the present facts and circumstances, this Tribunal is of the view that the agreed rate of interest should be awarded to the applicant bank and there is no ground to reduce the rate of interest. The Hon'ble High Court and Hontle Supreme Court in particular circumstances of the case has awarded lesser rate of interest but in the present cilse no such condition exists to reduce the rate of interest. 9T

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10. The Ld. counsel for the defendant has submitted that cerbin properties has been sold under the provisions of the SARFAESI Act and the amount from certain UC policies have been received by the applicant bank and also the amount of the FDR. The applicant bank has also conceded the same. But on this ground the OA cannot be dismissed.

11. From perusal of the entire evidence, it is clear that, the applicant bank has proved his case against the defendant no. 2 to 10 and therefore, the defendants are liable to pay the amount claimed by the applicant bank and the O.A of the applicant bank is liable to be allowed. In the light of the above discussions, the present O.Aff.A. deserues to be allowed.

ORDER

1) I hereby allow this T.A. of the applicant bank and direct the defendant nos. 2 to 10 to pay joinUy and severally to the applicant within 30 days from today, a sum of Rs.3,85,26,097.48 along with cost, expenses and interest @12.50% from the date of filing of this O.A which has become T.A. till the date of realization.

2) In case of failure to deposit the above amount within the stipulated period, the same shall be recovered from the sale of personal movable and immovable assets of the defendant nos.2 to 10.

3) Recovery Ceftificate be issued forthwith and be sent to Recovery Officer, Debts Recovery Tribunal-Il, Delhi.

4) The registry of this Tribunal is hereby directed to issue free copy of the order and send the same to both the parties. e,\ i

TANO/206512023 16

5) Parties are direct to appear before the Ld. Recovery Officer, DRT-II, Delhi on 23.LL.2026. Pending IAs, if any, stand disposed of. File be consigned to records. - ,+ \ 9d\r'l Date: 21.09.2026 (SUSHIL KUMAR RASTOGI) PRESIDING OFRCER DRT-II, Delhi This judgement has been signed, dated and pronounced in open court. Date :21.09.2026 - --- \ ' e). (susHrl KUMAR RAslOGr) PRESIDING OFFICER DRT-II, Delhi