PUNJAB AND SIND BANK vs M/s S.S. Engineers and Fabricators on 25 February 2019

FINAL ORDER

(25.02.2019)

1. Since the impugned account in the both the matters are same therefore, both the matters would be decided by a common order.

2. The applicant bank has filed the Original Application No.90/2007 before the Ld. DRT-III, Delhi which stands transferred to this Tribunal vide order dated 28.08.2015 passed by Ld. Registrar, DRT-III, Delhi and same has been registered as TA No.192/2015. The OA has been filed for recovery of Rs.18,68,545.26 (Rupees Eighteen Lakhs Sixty Eight Thousand Five Hundred Forty Five and paise Twenty Six only) alongwith pendentelite and future interest @18.5% p.a. with monthly rests from the date of filing of the present OA till its realization.

3. Facts as succinctly set out in the OA are that the OA has been filed Sh. Bhisham Singh and Sh. Suresh Lal, both are Manager and

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principal officers of the applicant bank and they are duly competent to sign, verify and institute the present OA.

4. It is stated that the defendant No.1 is a proprietorship firm of defendant No.2 and the defendant No.3 to 5 are guarantors. The defendant No.1 through its proprietor defendant No.2 approached the applicant bank for sanction of credit facilities vide letter dated 11.12.1993. The said request was considered by the applicant bank and sanctioned a Cash Credit (Hypothecation) Limit of Rs.3 lakhs and in consideration of the same, the defendants No.1 & 2 executed the various loaning and security documents which include Demand Promissory Note, Letter of Waiver, Letter of Continuity and Agreement of Hypothecation of Goods to secure a demand cash credit etc. The defendant No.4 executed the Personal Guarantee Agreement dated 18.12.1993.

5. Further, the defendant No.1 through its Proprietor defendant No.2 again approached the applicant bank and requested for enhancement of Cash Credit (Hypothecation) Limit from Rs.3 lakhs to Rs.7 lakhs and same was enhanced by the applicant bank.

6. In consideration of enhance the said limit, the defendant No.1 & 2 executed the necessary loaning and security documents including D.P. Note, Letter of Waiver, Undertaking, Letter of Continuity, Agreement of Hypothecation of Goods and Guarantee Agreement executed by defendant No.4.

7. In order to secure the said loan, the defendant No.3 created the mortgage by way of deposit of sale deed of the property i.e. Plot No.A-61, Inder Puri, New Delhi and confirmed the deposit of the title deeds on 23.11.1994. The said loan was also secured by hypothecation of stocks of steel, shaft, frames, plates etc.

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8. It is also stated that the defendant No.1 through its Proprietor again requested to the applicant bank for enhancement of Cash Credit (Hypothecation) Limit from Rs.7 lakhs to Rs.11 lakhs which was enhanced by the applicant bank vide sanction letter dated 21.08.1995. The defendants executed the loaning documents as D.P. Note, Letter of Waiver, Letter of Continuity, Agreement of Hypothecation of Goods and Personal Guarantee Agreement executed by defendant No.3 & 4. The said loan was also secured by the earlier securities and defendant No.3 further confirmed the deposit of title deeds of his property on 29.08.1995.

9. It is further stated that the defendant No.1 through its proprietor further approached the applicant bank for enhancement of CC (Hyp.) Limit from Rs.11 lakhs to Rs.11 lakhs which was enhanced by the bank on 27.02.1997. In consideration of the enhance the loan, the defendant No.1 & 2 executed the D.P. Note, Letter of Waiver, Letter of Continuity, Agreement of Hypothecation of Goods to secure a Demand Cash Credit and Personal Guarantee Agreement executed by defendant No.3 to 5.

10. In order to secure the said enhanced facility, the defendant No.3 confirmed the deposit of the title deeds of his property on 28.05.1997. The defendant No.5 in order to secure the said advance has created the mortgage by way of deposit of title deeds of his property i.e. Shop Bearing No.207 on Ground Floor, J-9/36, Rajouri Garden, New Delhi.

11. However, the defendants failed to maintain the financial discipline of the applicant bank. The defendants acknowledged the liability from time to time and signed and executed the Balance Confirmation Letters dated 29.07.1998, 05.02.2000, 28.06.2001,

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04.10.2001 and 02.07.2004. Therefore, the applicant bank reminded the defendants to regularize the accounts by way of personal contacts and writing letters but inpsite of various assurances, the defendants did not deposit the dues. Thereafter, the applicant bank issued notice under Section 13(2) dated 28.10.2003 calling upon the defendants to repay the dues but they failed to pay the dues. It is stated that thereafter, the applicant bank initiated action under Section 13(4) of the SARFAESI Act, 2002 however, one Sh. Ramesh Multani claiming to be the owner of the mortgage property has filed an SA in DRT-III, Delhi which is pending. Applicant bank has left with no other alternative but to approach to this Tribunal hence, the present OA has been preferred.

12. Notices were issued to the defendants. Despite service, none appeared on behalf of the defendant No.1 to 3 nor filed the written statements thus, defendant No.1 & 2 were proceeded ex-parte vide order dated 29.07.2013 and defendant No.3 was proceed ex-parte vide order dated 08.10.2013. The defendant No.4 & 5 put their appearance but despite last and final opportunity, defendant No.4 & 5 did not file the written statements thus, their right to file the WS was closed vide order dated 24.12.2013.

13. In order to prove the averments made in the OA, the applicant bank has filed its evidence by way of affidavits of Shri Bhisham Singh, Sh. R.S. Wadhwa, Sh. S.P. Singh and Sh. H.S. Khera.

(i) Sh. Bhisham Singh, Manager of the applicant bank who has proved the various loaning and security documents as Exb.AW1/1 to Exb.AW1/47.

(ii) Sh. R.S. Wadhwa, working in the branch of applicant bank has access to all the records of the applicant bank and has handled the case and who has proved the documents as Exb.AW2/1 to Exb.AW2/3.

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(iii) Sh. S.P. Singh, Senior Manager of the applicant bank who has proved the documents as Exb.AW3/1 to Exb.AW3/2.

(iv) Sh. H.S. Khera, Chief Manager of the applicant bank has proved the Balance Confirmation Letter dated 22.07.2004 as Exb.AW4/1.

14. I have heard the Ld. Counsel for the applicant bank and perused the record.

15. The witness of the applicant bank has fully corroborated the averments made in the OA. Even otherwise the whole case of the applicant bank is based on documents and the witness has fully proved all these documents. In my view there is no question of disbelieving the evidence led by the applicant bank and the applicant bank has proved its case beyond reasonable doubt. The liability of the defendant 1 to 5 is joint and several.

16. In the light of above discussions, the Original Application deserves to be allowed against defendants No.1 to 5 jointly and severally.

17. The applicant i.e. M/s S.S. Enterprises has filed the SA No.424/2012 before the Ld. DRT-III, on 10.07.2012, which stands transferred to this Tribunal vide order dated 28.08.2015 passed by Ld. Registrar, DRT-III, Delhi and registered as TSA No.128/2015. By way of the SA, the applicant prayed to declare all the actions taken by the bank are void, illegal arbitrary and quash the same and restrain the respondent bank, its employees, representatives, officers, Receiver etc. from proceeding ahead in respect of property i.e. one room Private Unit bearing No.207, on ground floor, having super area 104 sq. ft. part of property No.J-9/36 situated in the area of village Tatarpur and colony known as Rajouri Garden, New Delhi (for

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short “property in question”) from taking physical possession of the said property.

18. Facts as succinctly set out in the SA are that the bank has sanctioned the cash credit facility to the applicant which was secured by way of the properties and hypothecation assets including the property in question. It is stated that the applicant had been dealing with the defendant bank quite satisfactorily for about 13 years since 1991 but due to some financial and business crunch the account of the applicant became irregular and it was classified as NPA on 31.12.2003 however, the applicant had been keen to pay the legitimate dues of the bank at the earliest possible and accordingly submitted a compromise proposal of Rs.14 lakhs in the year 2005 towards full and final settlement of the dues of the bank and the applicant also paid Rs.4 lakhs in the year 2005 after the receipt of the notice dated 29.10.2004 of the SARFAESI Act, 2002 and also handed over post dated security cheques of balance amount of Rs.10 lakhs but the said cheques dishonored. It is also stated that the applicant assured the bank that he would pay the earlier settlement remaining amount of Rs.10 lakhs towards full and final settlement but the respondent bank refused the said offer amount. It is also stated that the applicant has received the notice dated 07.06.2012 from the court receiver appointed by Ld. CMM for taking physical possession of the property in question on 16.07.2012 thus, the applicant preferred the present SA

19. It is also stated that the dues of the bank are very less than the value of the property therefore, the action of bank is liable to be quashed.

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20. Notice was issued to the respondent. The respondent bank has filed the reply of the present SA.

21. In the reply, it is stated that the property is duly mortgaged with the applicant bank on the basis of title deeds and the mortgagor Shri Jasbir Singh duly confirmed the deposit of title deeds on 27.03.2001 therefore, it is stated that the bank has right to take possession of the mortgaged property. It is stated that the notice under Section 13(2) of the SARFAESI Act, 2002 dated 02.02.2009 had been served upon the applicant. It is also stated that the due to the negligence on the part of the applicant, the account of the applicant became NPA and there is financial crunch as alleged in the SA. It is also stated that the applicant has been given sufficient time for one time settlement but applicant has failed to settle the dues of the bank thus, the bank initiated steps for taking possession of the property in question in terms of the order passed by the Ld. ACMM, Delhi however, in view of the order dated 03.07.2012 passed by this Tribunal, further steps have not been initiated as the applicant was directed to deposit some amount in terms of directions passed by this Tribunal.

22. The applicant has filed its rejoinder and denied all the allegations made by the bank in reply and reiterated the averments made in the SA.

23. The applicant has filed its evidence by way of affidavit of Shri Rakesh Kapur, Proprietor of defendant No.1 company and who has exhibit the documents as copy of notice under Section 13(2) of the SARFAESI Act, 2002 dated 28.10.2004 (Exb.AW1/1) and notice dated 07.06.2012 (Exb.AW1/2.

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24. The respondent bank has filed its evidence by way of affidavit of Shri Devinder Singh Anand, Officer of the respondent bank who has proved the documents as Exb.DW1/1 and Exb.DW1/2.

25. I have heard the Ld. Counsel for the parties and perused the record.

26. In the present SA, the applicant herein has admitted the default and NPA and stated that due to some financial and business crunch the account of the applicant became irregular and it was classified as NPA on 31.12.2003. It is stated that the applicant already paid Rs.4 lakhs in the year 2005 after the receipt of the notice dated 29.10.2004 and assured the bank that he would pay the earlier settlement remaining amount of Rs.10 lakhs towards full and final settlement but the respondent bank refused the said offer amount and going to take possession of the property in question.

27. On the other hand, the respondent bank has stated that the applicant has been given sufficient time for one time settlement but applicant has failed to pay the settled amount of the bank thus, the bank initiated steps for taking possession of the property in question in terms of the order passed by the Ld. ACMM, Delhi

28. I have gone through the SA. In the SA nothing has been averred by the applicant against the bank and applicant did not challenge any of the measures of the bank which is illegal and not in accordance with law under the SARFAESI Act, 2002. The applicant has admitted in para 7 of the SA that due to financial and business crunch, account was classified as NPA.

29. This Tribunal allowed the interim relief in favour of the applicant vide order dated 13.07.2012 and restrain the bank for taking

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possession of the property in question subject to making payment of Rs.1 lakhs by the applicant to the respondent bank before the time of taking physical possession by the court receiver, another amount of Rs.4 lakhs within one week and thereafter, an amount of Rs.5 lakhs within 30 days. Further, during the proceeding, the applicant was ready to settle the loan amount and matter was listed before Lok Adalat on 10.09.2016 but no settlement has been arise between the parties. The only intention of the applicant is to delay the recovery of the bank.

30. Therefore, I do not find any merit in the present SA and same is hereby dismissed. The respondent bank is free to take action in accordance with law. ORDER on TA No.192/2015

(i) I allow this OA and direct the defendant No.1 to 5 to pay to the applicant bank, within a period of 30 days, a sum of Rs.18,68,545.26 (Rupees Eighteen Lakhs Sixty Eight Thousand Five Hundred Forty Five and paise Twenty Six only) alongwith pendentelite and future interest @18.5% p.a. with monthly rests from the date of filing of the present OA till its realization, failing which the aforesaid amount shall be recovered from the sale of mortgaged properties as well as other personal moveable and immoveable assets of the defendants. The cost of litigation be also borne by the defendants. The applicant bank is also directed to file the revised statement of account before the Ld. Recovery Officer of this Tribunal.

(ii) The applicant bank is also directed to file the revised statement of account before the Ld. Recovery Officer of this Tribunal. The recovery certificate be issued forthwith and be sent to the Recovery Officer, DRT-I Delhi.

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(iii) Parties are directed to appear before the Recovery Officer, DRT-I Delhi on 04.04.2018.

(iv) Copies of final order as well as Recovery Certificate be sent to all concerned free of cost.

(v) File be closed and consigned to record. (Dr. REKHA G. DHAKAR) PRESIDING OFFICER DRT-I DELHI (Pronounced in open court) February 25, 2019