STATE BANK OF INDIA vs MS KUSHELI AND ORS on 21 May 2025

1. M/s Kuheli

2. Ms. Kuheli Dutta -Applicant bank

- Defendants Present: Shri Arvind Gupta, Counsel appears for applicant bank. None for defendants. FINAL OR.DER This original application has been filed by the applicant ban( on 07.12.20L6 through Mr. C. P. Negi, Chief Manager of the applicant bank, under Section 19 of the RDB ACT, 1993 against the defendants fot' recovery of a sum of Rs.24,94,879/- together ulith cost, charges and pendentellite and future interest @12.05% p.a. frorn 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 the defendant no.2 being principal officerTproprietor of the defendant no.1, the applicant bank sanctioned under the SBI Cash Credit Limit Scheme of Rs.20,00,000/- for financial assistance, vide sanction letter dated 23.02.20t3. The defendant no.2 in the capacity of principal officer/proprietor of the ciefendant no.l as well as guarantor in her personal capacity, executed qnd !s[i,vg!red all the necessary <,1

loaning documents on 23.02.2013. In order to secure the above said SBI Cash Credit Loan Scheme, the defendants hypothecated the goods as per agreement as primary security. Again, at the request of defendants, the applicant bank enhanced the said limit from Rs. 20 lakhs to Rs.24 lakhs, vide sanction letter dated 29.11.2013. The defendants executed all necessry loaning documents on 29.11.2013.

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 bank 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 as NPA on27.09.20t6. Therefore, the applicant bank serued a legal notice dated 03.10.2016 to the defendants, demanding the amount due as on that date, but failed to recover the same. Thus, the present O.A.ff.A is preferred by the applicant bank to recover its dues.

4. On notice by this Tribunal, the defendant nos.1 & 2 put appearance through counsel and filed written statement and evidence.

5. In their written statement the defendant nos.1 & 2 has denied the facts mentioned in the OA. It is submitted that the application under reply is barred by time of limitation. Initially Cash credit limit was made to defendant no.1 on 20.02.20L3 and present application has been filed on 07.12.2016 i.e. beyond the stipulated period of limitation, hence present application at this belated stage is legally not maintainable. It is submitted that the defendant no.2 nevelsigned alleged revival lsr- letter date. 31.10.2016. In fact, the same was got singed by applicant bank from defendant no.2 on 20.02.2013 at the time of granting initial cash credit facility and has been conveniently and manipulated as revival letter dated 31.10.2016 with a view to make present application within limitation. It is further submitted that the defendant no. t had initially taken Cash Credit Facility under cash credit limit/loan scheme of applicant/bank a sum of Rs. 20 lacs only on 20.02.2013, vide loan account No. 32839573925 which was subsequently enhanced to Rs.24 lacs from applicant bank on 29.11.2073.It is alleged that because the defendant no.1 has failed to pay off its outstanding liability to the applicant bank, the said cash credit account was declared N.P.A. on 27.09.2016. It is submitted that before declaring the cash credit account NPA, a demand notice of 90 days is mandatory. In this case no such notice has been serued on the defendants' Hence the application under reply is legally untenable, because the cash credit account of the defendant no'1 has been illegally and arbitrary been declared as NPA and present application has been flled without giving proper and effective opportunity of being heard to the defendants. It is submitted that no notice U/s. 13(2) of SARFAESI Act has been sent to the defendant no.1 before declaring/classiffing their cash credit account NPA. It is further submitted that at present the defendant no.1 has stock more than of Rs.35 lacs. The same has been held up due to global recession and implementation of policies of Central Government of India, i.e. demonetization and GST etc' The defendant no.2 used to approach and request the applicant/bank to cooperate them and wait till sale of stocks/goods held up with the defendants duelo global recession and 4A '.

implementation of policies of Central Government of India, i.e. demonetization and GST etc. and assured the applicant/bank that she would clear the pending EMIs' towards cash credit liability, immediately on sale of their held-up stocks/goods without even a delay of single day. However, the applicanVbank instead of cooperating with the defendants under financial crisis, has filed present application, without according due and proper opportunity of being heard to the defendants. The defendants have even repeatedly offered the applicanVbank to attach the stocks/goods available with the defendants at market rate, even at purchase value and to credit the value of same in their aforesaid cash credit/loan account. It is further submitted that at the most the applicant/bank attached the hypothecated goods ancl cannot take any other coercive means for their alleged recovery. However, the applicant/bank has failed to accede aforesaid just and bonafide request of the defendants and has filed present application in an illegal and arbitrary manner. No notice U/S 13(4) of SARFAESI Act, 2002 has ever been served by the applicant Bank to the defendants. The applicant bank has failed to accede just and bonafide request of defendant to re-schedule their outstanding liability payable to the applicant bank by the defendants. The defendants have already paid substantial amount out of their total liability duly accepted by the applicant bank. The application has not been filed by a competent person. Sh. C.P. Negi, is not competent to represent the applicant bank, sign, veriff, file and proceed with present application. No alleged authorization in favour of Sh. C.P. Negi, to represent applicant bank, sign, veriff the pleadings and to institute/file the present application, has been supplied to the defendants' Hence CI

the application is legally not maintainable and liable to be dismissed out rightly. The documents relied by the applicant bank are illegal and cannot be read against the defendants, because the same were got signed from defendant no.2, without explaining the contents of same, nor she was allowed to understand the same, before getting her signature. Even otherwise the documents relied by the applicant bank are giving undue favour to applicant bank and are adverse and prejudice to the rights and interest of defendants. The interest and penalties for alleged late payment claimed by the applicant bank is illegal, exorbitant and legally untenable. Applicant is not entitled to claim the same or the defendants' can be held liable to pay the same. The claim of the applicant is malafide, dishonest, legally untenable and without substance. In fact, the payments received from the defendants from time to time have not been credited in account of defendant no.1. Earlier defendant no.1 used to pay the due installments to the applicant regularly without even a single default, however, due to global recessions and implementation of policies of Central Govt. of India, i.e. demonetization and GST etc. the defendant no.1 could not pay some of due installments to the applicant bank. The applicant- bank was duly informed about the difficulty suffered by defendant no.1, in making payment of some due installments and sought some time to clear the pending installments, but the applicant bank, without acceding just and bonafide request of defendant no.1, without giving any opportunity of being heard to defendant no.1, has filed present application, in an illegal and arbitrary manner, by claiming exorbitant rate of penal interest and penalties for alleged delayed payment, occurred on account of a(oregid cause and reason s4.

beyond the control and reach of defendant no'l' Hence the present application and claim of the applicant is malafide, dishonest and legally untenable' It is prayed that this Honble Tribunal may dismiss the present O.A with costs in favour of defendants and against the aPPlicant.

6. The appticant bank as well as defendants have flled their resPective evidence'

7. Heard the Ld' Counsels of applicant bank and perused the record'

8. From perusal of the written statement it is clear that the defendant has taken a plea that the OA is time barred as the respondent has taken the cash credit limit on 20.03.2013 and application has been filed on 07.12.20L6 after expiry of the limitation period' It is submifted that the respondent no'2 has never signed alleged revival letter dated 3L'L2'20t6 and in fact it was got signed by the bank on 2O'02'20t3 and conveniently manipulated as revival letter dated 31'10'2016' But the contention of the defendants has no force' The defendant is an educated person and is carrying on business. Therefore, it cannot be deemed that she will sign the paper without going through the same' From perusal of the record it is clear that the defendant no. 2 has signed the revival letter dated 31.10'2016whichhasbeendulyprovedbytheapplicant bank. Therefore, the contention of the defendant has no force. eA\

9. The next ground of the defendants is that the demand notice has not been issued which is mandatory for filing of the OA. From perusal of the record it is clear that the demand notice has been issued by the bank' therefore, the contention of the defendants has no force.

10. The next ground of the defendants is that no notice under Section 13(2) and 13(4) of the SARFAESI Act has been issued to the defendants and therefore' the OA cannot be allowed' But the contention of the defendantshasnoforce.Theapplicantbankhasnot taken any action under provisions of the SARFAESI Act but has filed the present OA under Section 19 of the RDB Act. Under the RDB Act there is no necessity of issuing any notice under Section 13(2) and 13(4) ofthe SARFAESI Act. Therefore, the defendants has no force' grounds of the

11. The next ground of the defendant is that the first charge of the applicant bank was the hypothecated stocks and the applicant bank may attach the stock and goods and setl the same on the market price to recover the dues. The applicant bank has failed to do so and therefore, the defendants cannot be held liable to pay the amount' But the contention of the defendants has no force. The applicant bank can proceed against the defendants under Section 19 of the RDB Act for the recovery of the dues even if he has failed to sell the $ocks and goods of the defendants' Therefore' the contention of the defendantsrlas no force'

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12. The next ground of the defendants is that Sh.C.P.Negi is not competent person to sign and veriff the present OAffA. But the contention of the defendants has no force. Shri C.P.Negi has filed the necessary documents authorizing him to file and sign the present OA. Therefore, there is no ground to dismiss the OAfl-A.

13. The next ground of the defendants is that the payment made by the defendants has not been shown properly in the statement of account and no due credit has been given to the deposits. But the defendants has failed to make any specific entry of payment that has not been credited in the account. Therefore, there appears no irregularity in the statement of account. There is no evidence that any amount deposited by the defendants has not been given due credit in the statement of account. Therefore, the contention of the defendants has no force.

14. From perusal of the entire evidence, it is clear that the applicant bank has proved his case against the defendants and therefore, the defendants are liable to pay the amount claimed by the applicant bank and the OAfl-A of the applicant bank is liabie to be allowed.

ORDER

1) I hereby allow this T.A. of the Applicant Bank and direct the defendant nos. 1 & 2 to pay jointly and severally to the applicant bank within 30 days from today, a total sum of Rs.24,94,879/- along with cost, expenses and interest @12.05o/o from the date of filing of this OA which has become T.A. till the date of realization. . _ , el

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2) In case of failure to deposit the above amount within the stipulated period, the same shall be recovered from sale of hypothecated assets. In case of short fall, the same shall be recovered from sale of personal movable and immovable assets of the defendantnos. 1&2.

3) Recovery Certificate 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.

5) Parties are direct to appear before the Ld. Recovery Officer, DRT-II, Delhi on 2L.07.2025. Pending IAs, if any, stand disposed of. File be consigned to records.

g)\ Date : 21.05.2025 (SUSHIL KUMAR nnStOCr) PRESIDING OFFICER DRT-II, Delhi This judgement has been signed, dated and pronounced in open court. Date : 21.05.2025 (SUSHIL KUMAR RASTOGI) PRESIDING OFFICER DRT-II, Delhi ---.-J+g"\ T