PUNJAB NATIONAL BANK vs M/S AFM FOODS LTD on 8 May 2026

FINAL ORDER

This original application has been filed by the applicant bank on 30.09.2022 before DRT-III, Delhi & then transferred to DRT-I, Delhi under Section 19 of Recovery of Debts and Bankruptcy Act, 1993 against the defendants for recovery of a sum of Rs.4,90,87,360.09 (Rupees Four Crore Ninety Lacs Eighty Seven Thousand Three Hundred Sixty and paisa Nine only) as on 31.08.2022 together with pendentelite and future interest @contractual rate of interest with monthly rests till the date of its realization and costs.

2. The brief facts of the case are that at the request of the defendant no.1 through defendant no.2 as director along with defendant no.3 and 4 as guarantors in the business of manufacturing/ import/ export etc. of all type of food products, the applicant bank initially sanctioned Cash Credit (Hyp.) limit of Rs.150.00 lacs on 25.07.2013 which was modified / enhanced on various dates lastly to Rs.315.00 lacs. The applicant bank sanction Term Loan of Rs.50.00 lacs and two vehicle loans of Rs.7.40 lacs @9.10% interest per annum to be repaid in 36 EMIs of Rs.23,567/- & Rs.7.50 lacs @9.00% interest per annum to be repaid in 36 EMIs of Rs.23,850/-. On the request of defendant no.1, the applicant bank restructured the account on 30.09.2019 by converting the limit of CC(H) into Working Capital Term Loan of Rs.329.98 lacs to be repaid in 60 EMIs of Rs.7,32,356/- starting from September'2021 and Cash Credit(Hyp.) of Rs.15.00 lacs @9.65% interest per annum with monthly rests against hypothecation of stocks of raw materials, Sd—

stock in process, finished goods, stores & spares, receivables etc. and mortgage of property owned by defendant no.3. Further, the defendants agreed to pay penal interest @2% per annum over the agreed rate of interest in case of default or delay in repayment of interest or installments.

3. That in order to avail the credit facilities, the defendant no.2 as authorized vide Board Meeting for execution of loaning and security documents submitted loan applications with necessary documents and executed Sanction Letters, Supplementary Agreements to Secure Credit I Loan Facilities, Common Agreements, Agreement of Guarantees of defendant no.2 to 4, Agreements of Term Loan, Hypothecation of Goods and Book Debts, Hypothecation of Current Assets, Affidavit cum Undertaking of Defendants in favour of the applicant bank on various dates between 25.07.2013 to 30.09.2019.

4. The defendant no.1 availed the various credit facility from the applicant bank based on approval from its Board Meetings held on various dates staring from 27.07.2013 to 30.09.2019.

5. That in order to secure the credit facilities, the defendant no.1 through defendant no.2 hypothecated the stock of present and future fixed and current assets and book debts not older than 180 days towards the applicant bank. In addition, the defendant no.3 created equitable mortgage of freehold factory building situated at 5-A (out of Khasra No.205, 205 & 11), Govind Mohalla, Haiderpur, Delhi-110088 measuring 311 sq.yards in favour of applicant bank.

6. The defendant no.1 hypothecated the vehicles SFC 407 CAB Chasis TATA 407 bearing Registration No.DL1LX9863

- purchased from M/s Cargo Motors Pvt.Ltd. and Breeza WI Car bearing registration no.DL5CP7111 purchased from M/s T R Sawhney Motors Ltd. towards the applicant bank.

7. The applicant bank filed its charge with CERSAI vide Asset ID 200005686195 by filing the security interest on 06.08.2015 executed by defendant no.1

8. It has been submitted by the applicant bank that after availing the aforesaid credit facilities, the defendants miserably failed to abide by the terms and conditions of agreements and stopped submitting the details of hypothecated goods, stocks, book debts and pay the dues as per terms and conditions and repayment schedule despite various notices and reminders for regularization of the account. Consequently, the applicant bank classified the account as NPA on 02.05.2021 as per extant RBI guidelines but no efforts were made by the defendants to clear the dues, hence, the applicant bank has approached this tribunal for recovery of its dues.

9. Notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 dated 07.06.2021 for Rs.4,11,41,977.19 was issued by the applicant bank but defendants not came forward for regularization of the accounts.

10. 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 08.12.2025, the defendants have been proceeded ex-parte as they have not appeared before the Tribunal and even no written statement, evidence and affidavit of assets have been filed by the defendants. 50/

11. In order to prove its case, the applicant bank has filed its evidence by way of affidavit of Shri R.S.Rawat as authorized representative of the applicant who has proved the original and copy of documents such as Power of Attorney, Minutes of Board Meetings, Sanction Letters, Agreement of Hypothecation of Assets, Common Agreement, Agreements of Guarantees, Affidavit cum Undertaking of Defendants, Supplemental Agreement to Secure Credit/Loan Facilities, Common Agreement, Agreements of Term Loan, Undertakings for Assignment of Receivable Cash Flows, Balance & Security Confirmations, Common Agreements, Record of CERSAI, Vehicles Registration Certificates, Insurance & Details of Vehicles, NPA Certificate, Demand Notice, Statement of Accounts and Certificate as per Banker's Books Evidence Act 1891, Breakup Sheet marked as Ex.AW1/1 to Ex.AW1/88.

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 proved.

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 defendants to pay to the applicant bank within a period of 30 days, jointly or severally, a sum of Rs.4,90,87,360.09 (Rupees Four Crore Ninety Lacs

Eighty Seven Thousand Three Hundred Sixty and paisa Nine only) as on 31.08.2022 together with pendentelite and future interest @11.65% per annum with monthly rests from 01.09.2022 till the date of its realization, failing which the aforesaid amount shall be recovered from the sale of hypothecated stocks, book debts, hypothecated vehicles and mortgaged freehold factory building situated at 5-A (out of Khasra No.205, 205 & 11), Govind Mohalla, Haiderpur, Delhi- 110088 measuring 311 sq.yards of the defendant no.3. (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 are to be sent to all concerned free of cost. 5d — (GOVIND BALLABI SI MA) PRESIDING OFFICER DRT-I, DELHI (Dictated and pronounced in open court) Dated: 08.05.2026