KARNATAKA BANK LIMITED vs MAS GASAIR SYSTEM PRIVATE LIMITED AND OTHERS on 8 May 2026

FINAL ORDER

This original application has been filed by the applicant bank before DRT-II, Delhi on 10.02.2022 and then transferred to DRT-I Delhi under Section 19 of Recovery of Debts and Bankruptcy Act, 1993 read with Rule 8 of the Debt Recovery Tribunal (Procedure) Rules 1993 against the defendants for recovery of a sum of Rs.74,80,587.54 (Rupees Seventy Four Lacs Eighty Thousand Five Hundred Eighty Seven and paisa Fifty Four only), out of which:

- Rs.58,22,120.26 @14.80% interest per annum with monthly rests from 01.02.2022 in Overdraft account;

- Rs.14,01,481.28 @15.25% interest per annum with monthly rests from 01.02.2022 in Term Loan account;

- Rs.2,56,986 @19.75% interest per annum with monthly rests from 01.02.2022 against invocation of bank guarantee account; till its actual realization along with costs.

2. The brief facts of the case are that on the request of the defendant no.1 through its directors being defendant no.2 and 3 engaged in the business of production of all gases, compressed air systems, generator etc., the applicant bank sanctioned overdraft facility of Rs.30,00,000/- (Rupees Thirty Lacs only) and Bank Guarantee of Rs.10,00,000/- (Rupees Ten se/—

Lacs) on 22.06.2009 which was renewed / enhanced / modified from time to time, lastly on 20.08.2019 for Overdraft facility for Rs.49,00,000/- (Rupees Forty Nine lacs only) @10.35% interest per annum and Bank Guarantee of Rs.25.00 lacs for the working capital requirement against hypothecation of Stocks and book debts as well as mortgage of three properties owned by defendants.

3. In addition, the applicant bank sanctioned car loan of Rs.17,40,000/- (Rupees Seventeen Lacs Forty Thousand only) on 21.01.2017 for purchasing Innova Crysta VX 7str Car in favour of defendant no.1. The defendant no.2 and 5 stood as directors/ guarantors for the credit facilities extensively liable for making entire money together, sanctioned by applicant bank in favour of defendant no.1. In case of default in payment of interest or instalments, the defendants authorized the applicant bank to charge penal interest @5% per annum above rate of interest charged in the account after due date.

4. In order to avail aforesaid credit facilities, the defendant no.1 submitted account Opening Form & loan application and authorized defendant no.2 to execute documents on its behalf. The defendant no.2 as authorized signatory executed Undertaking, Letters of Request, Letters of Authority by defendant no.2 to 5, Letters of Guarantee, Take Delivery Letters, Demand Promissory Notes, Declarations, Hypothecation Agreements for stock and vehicle/ machineries etc., General Power of Attorney for Book Debts, Bank Guarantee, Consent Letters from Guarantors and Term Loan Agreement on 26.08.2019 and 27.01.2017 in favour of the applicant bank. 5d-

5. That in order to secure the credit facilities, the defendant no. 1. through defendant no.2 hypothecated its stocks and book debts towards applicant bank. The defendant no.2 and 3 offered the following properties and executed Memorandums of deposits of title deeds on 16.01.2004, 30.08.2005 and 12.07.2012 in favour of applicant bank: Residential property bearing no.A-9, Ground Floor, Plot No.A-9, Parsvnath Paradise, JP Garden Estate, Mohan Nagar, Ghaziabad UP measuring 109.06 sq.metre owned by defendant no.2 and 5; Freehold Residential HIG Flat No.B-42, Ground Floor without roof rights, Plot measuring 107.40 sq.metres, Parsvnath Paradise, JP Enclave, Village Arthala, Mohan Nagar, Ghaziabad, UP owned by defendant no.2 and 4. This property has been kept as security for the housing loan availed which also became NPA; Residential vacant Plot No.31, Bangla No.210-B, Raj Rajeshwari Palace, Meerut Cant., Meerut, UP owned by defendant no.3. In addition to secure the car loan facility, the defendant no.1 through defendant no.2 and 3 hypothecated the vehicle namely Innova Crysta Vx 7str car in favour of applicant bank on 03.06.2017.

6. The applicant bank had sanctioned Bank Guarantee of Rs.2.00 lacs in favour of Central Drug Research Institute, Lucknow which was forfeited on 13.10.2020, thus defendants liable to pay Rs.2,56,986/- with interest @19.75% per annum compounded quarterly from 01.02.2022 till its realization. sd-

7. The defendants vide letter dated 14.01.2020 and 13.01.2022 acknowledged the debt in respect of Overdraft and Term Loan facilities and for waiver of interest.

8. It has been submitted by the applicant bank that after availing the aforesaid loan facilities, the defendants failed to comply with the terms and conditions of sanction and failed route their transactions thru the account and failed to submit periodical stock statements etc. with the applicant bank. Ultimately, the applicant bank classified the overdraft and car loan accounts as NPA on 27.12.2019 as per RBI guidelines but the defendants have failed to regularize the accounts. Hence, the applicant bank has approached this Tribunal for recovery of their dues.

9. Notices of this O.A. were issued to the defendants and despite of proper service, the defendants have chosen to absent from the proceedings. As per order dated 15.12.2023, the defendants have been proceeded ex-parte as not appeared before the Tribunal and even written statement, evidence and affidavit of assets have not been filed by the defendants

10. Notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 was issued on 14.09.2020 to the defendants duly served by the applicant bank and taken symbolic possession of mortgaged properties. The defendants preferred appeal under Section 18 of SARFAESI Act 2002 and obtained restraint order dated 18.11.2021 from the Ld. DRT Lucknow from taking physical possession of property.

11. In order to prove its case, the applicant bank has filed its evidence by way of affidavit of Sh. Lalit Dua, authorized representative of the applicant bank, who have proved the documents such as Power of Attorney, Sanction Letters, Declarations, Account Opening Form, Letters of Request, Letters of Authority, Letters of Guarantee, Take Delivery Letter, Demand Promissory Notes, Hypothecation Agreements, General Power of Attorney, Memorandums of Deposits of Title Deeds, Term Loan Agreement, Consent Letters, Bank Guarantee, Letters, Statement of Account pertaining to protect Bill against Invocation of Bank Guarantee, Letter of Acknowledgement of Debt, Certified Statement of Accounts, Demand Notice, Order of Ld. DRT, Lucknow, Letter of Defendants dated 13.01.2022 marked as Ex.AW-1/1 to Ex.AW- 1/34.

12. The applicant bank has fully corroborated the averments made in the O.A. Even otherwise the whole case of the applicant bank is based on the documents and the same have been duly approved.

13. The case filed by the applicant bank gone unrebutted and there is no question of disbelieving the case of the applicant bank and the applicant bank has proved its case beyond reasonable doubts.

14. In the light of the above discussions, the Original Application deserves to be allowed.

ORDER

I, allow this OA and direct the defendant to pay to the applicant bank within a period of 30 days, a sum of 5a-

Rs.74,80,587.54 (Rupees Seventy Four Lacs Eighty Thousand Five Hundred Eighty Seven and paisa Fifty Four only) Rs.58,22,120.26 @14.80% interest per annum with monthly rests from 01.02.2022 in Overdraft account; Rs.14,01,481.28 @15.25% interest per annum with monthly rests from 01.02.2022 in Term Loan account; Rs.2,56,986 @19.75% interest per annum with monthly rests from 01.02.2022 against invocation of bank guarantee account; till the date of realization and costs; failing which the aforesaid amount shall be recovered from the sale of hypothecated stocks, book debts, Innova Crysta Vx 7str car and below mentioned mortgaged properties : ­ Residential property bearing no.A-9, Ground Floor, Plot No.A-9, Parsvnath Paradise, JP Garden Estate, Mohan Nagar, Ghaziabad UP measuring 109.06 sq.metre owned by defendant no.2 and 5; ­ Freehold Residential HIG Flat No.B-42, Ground Floor without roof rights, Plot measuring 107.40 sq.metres, Parsvnath Paradise, JP Enclave, Village Arthala, Mohan Nagar, Ghaziabad, UP owned by defendant no.2 and 4. This property has been kept as security for the housing loan availed which also became NPA; ­ Residential vacant Plot No.31, Bangla No.210-B, Raj Rajeshwari Palace, Meerut Cantt., Meerut, UP owned by defendant no.3. In case of shortfall, the same shall be recovered from the sale of movable and immovable properties of the defendants.

(II) The recovery certificate be issued forthwith and be sent to the Recovery Officer, Debt Recovery Tribunal-I, Delhi. (III) Parties are directed to appear before the Recovery Officer, DRT I, Delhi on 07.07.2026. (IV) Copies of final order as well as Recovery Certificate be sent to all concerned free of cost. < (GOVIND BALLABH SHARMA) PRESIDING OFFICER DRT-I, DELHI (Dictated and pronounced in open court) Dated: 08.05.2026