BANK OF BARODA vs M/S NOIDA SOFTWARE TECHNOLOGY PARK LTD. on 6 June 2025

FINAL ORDER

This original application has been filed by the applicant banks, on 26.09.2016 through Mr. Ravinder Mohan f iku, Assistant General Manager of the applicant bank under Section 19 of the RDB Act, 1993 against the defendants for recovery of a sum of Rs.9,62,27,784.86 together with cost, charges and pendentellite and future interest @BR + 5.25o/o p.a. + penal @2% from date of filing of this O.A.-!!!l_!!e realization in full. q.\

TA NO. 170112022 2

2. The brief hcts of the case are that the request of defendant no.l, the applicant bank sanctioned a Cash Credit Facilities (hypothecation of stocks cum book debts) of Rs.25 crores with sub-limit for LC of Rs.25 crores, vide sanction lefter dated 27.03.2014. Vide letter dated 28.03.2014 the applicant conveyed for according the permission for equitably mortgage of the property being Industrial Plot 69, Sector 57, Noida, U.P title whereof was held by defendant no.9. The same was sent by registered AD post. Apparently, it was received inasmuch as the permission was accorded. The defendants executed all necessary loaning documents on 22.05.2014. Further, in terms of the offer the defendant no.9 came forward and deposited six documents and more specifically the original lease deed dated 25.09.1993 along with other documents pertaining to title qua immovable propefi being Industrial Plot no.69, Block B, Sector 57, Phase III in the lay out plan of Noida, UP admeasuring 800 sq.mtrs. with the applicant bank on 27.05.20t4 securing therein repayment of all the amounts in respect of the credit facility. The applicant bank has as a paft of process requested vide its letter dated 22.05.20t4 for NOC for the said property to secure the credit facility. The covering letter dated 26.05.2014 along with copy of PAN card, stamp papers were also provided. The letter dated 07.05.2014 wherein permission had already been granted in favour of the applicant for creation of charge by way of mortgage. The same was further confirmed vide letter dated 04.06.2014. As such the property was taken as collateral security. The facilities could not be disbursed since there had been certain compliance which were still to be carried out by defendant no.1. As such the defendant no.1_waTreminded of the same. 9>

TANO. 170112022 3 The defendant no.l however responded vide its letter dated 28.05.2014, however failed to comply with all the terms and conditions. Limited undertaking was also submitted on 28.05.2014. The defendant no.1 suggested certain modifications in the terms and conditions. The same was however regretted by the applicant vide its letter dated 01.06.2014. The same was duly accepted and returned to the applicant as token of acceptance. It is submitted that in consideration of the grant of the credit facilities the defendants no.1 on 02.06.2014 executed the relevant documents. On 06.06.2014 the applicant further agreed for modification of terms and conditions as detailed therein. It was duly conveyed, accepted by the defendants. On 07.06.2014 the defendant no. 8 clarifled various pending documents and agreed that all the terms and conditions could not be complied with. There had been some family settlement dated 17.05.2010 the copy whereof was still awaited. There had been certain other compliances also which remained pending. On 07.06.2014 the defendant no. 8 made available affidavit in respect of the charge created on the property. The defendant no. 8 also executed the declaration to be obtained from the directors of the company regarding creation of equitable mortgage. On 09.06.2014 the defendant no. I also executed declaration cum undeftaking. Similarly, an affidavit was submitted by defendant no. 9 as well on 07.06.2014 explaining the status of the propefi including the title and the status of actual physical possession' Declaration was also provided by defendant no. 9 on 07.06.20L4. On 07.06.2014 the applicant was provided with two more documents in respect of the mortgaged property at Noida. The docuyrent accompanied the el TA NO. t70U2022

originals of said two documents. In consideration of the documents having been executed and the facilities were granted, the defendant no. 1 enjoyed, utilized and availed the credit facilities in the account no. 105013021055. On 09.06.2014 the amount was withdrawn. On 74.06.20t4 in terms of the commitment by defendant no. 8 its director Mr. Vijay Kumar Jain in terms of the resolution dated 07.05.2014 approached the applicant and deposited documents pertaining to the title qua residential property / built up ground floor without roof rights along with one servant quarter (at under staircase between ground floor and first floor) area measuring 129 sq. meters out of total land area measuring 153.84 sq. meters, a part of property bearing no. H-31C & 31D, situated at Jangpura Extension, New Delhi. The defendant no. 8 inter alia deposited the original sale deed 28'05'2010 as well as the original registered family settlement dated 17.05.2010. The communication regarding central registry was drawn on 18.06'2014 in respect of the property at Noida title whereof was held by defendant no. 9. On 19.06.2014 NOC for creation of charge on the current assets was received from PNB. There had been ceftain other terms conditions which were yet to be complied with. Hence vide its letter dated t9.06.20L4 the defendant no. 1 was reminded qua compliance of terms and conditions. Vide its letter dated 20.06.20t4 the defendant no. 1 acknowledged the non- compliance, however, inter alia sought time for compliance. Vide its letter dated 21.06.2014 proprietor of defendant no. 9 was informed in respect of creation of charge qua credit facilities. The copy of the said letter was also addressed to the director Mr. Sanjay K. Jain. On 30.08.2014 the defendant nor8 was acknowledged g"\

TA NO. t70l/2022

qua creation of charge in respect of the credit facilities. On 02.09.2014 visit report was drawn wherein copy of the electricity bill was taken on record. On 24.0L.20t5 indemnity cum undertaking qua original documents was furnished in respect of the property duly mortgaged by way of deposit of title deed by defendant no. 8. The defendant no. 1 continued to avail the credit facilities however there had been certain terms conditions which were yet to be complied with and the defendant no. 1 was therefore reminded of its contractual obligations. The defendant no' 1 made available copy of its balance sheet and at relevant point being 2J being short borrowings/working capital loan were referred wherein the name of the applicant bank appeared and it was acknowledged that more than Rs.7.94 crores were outstanding as on 31.03.2015. The defendant no. 1 continued to utilize the credit facilities' On 28.10.2015 request for temporary overdraft for 30 days was received. The same was allowed however the defendant no. 1 made available a post-dated cheque no. 689511 dated 16.11.2015 in its ftvour in the sum of Rs. 1 Crore. It was assured that the cheque would be honoured on its presentation. It however bounced and returned for financial reasons on 30.11'2015. The fact of bouncing of cheque was conveyed to the defendant no. 1, however, the defendant no' 1 did not regularize the credit facilities nor discharge its contractual obligations. All details are reflected from the statement of account. The account became irregular and was even overdrawn vide its letter dated 28.11.2015 the defendant no. 1 admitted the facts. The credit facilities remained sticky, indiscipline continued. The applicant vide its letter 30.11.2015 reminded the <,\

TA NO. 170l/2022

defendant no. 1 of its contractual obligations however still the defendant no. 1 did not respond.

3. It is fufther 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 defenddnts, hence the account was classified as NPA dated 29.02.2076. Therefore, the applicant bank serued a notice dated 28.06.2016 to the defendants but failed to recover the same Thus, the present O.M[A is preferred by the applicant bank to recover its dues.

4. On notice by this Tribunal, the defendants put appearance through counsel. The defendant no.1 and defendant no. 4 to t have filed written statement and evidence.

5. In their written statement the defendant nos. 1 and defendant no.4 to t have denied the facts mentioned in the OA. It is submitted that in 2014, defendant no. 1 approached the applicant bank to avail certain credit facilities for operating its HITS business, namely to procure and maintain the inventory of Set Top Boxes (STBs) and Mini Down Link Head-Ends (MDLHES) amongst other requirements, and sought a loan of Rs. 25 Crores from the applicant bank for its working capital. Vide Sanction Letter dated 27.03.20t4, the applicant bank sanctioned the cash credit sought for by defendant no. 1 with a limit of Rs. 25 Crores' It is submitted that as per the terms and conditions in the said sanction letter, the;91]9.teral security to be 'I

TANO. 170112022 7 providd by defendant no. 1 to the applicant bank to avail the cash credit limit was the assignment of the HITS license issued to defendant no. 1 by the MIB in favour of the applicant bank. The sanction letter categorically mentioned that before release of the cash credit limit, a charge over the HITS license of defendant no. t had to be created and a tripartite agreement as per the prescribed format had to be executed between defendant no.1, applicant bank and the MIB. Further, in case of any dispute related to perfection of security, defendant no. 1 was to arrange for alternate security of equal amount and acceptable to the applicant bank. It is further submitted that the sanction of the amount of Rs. 25 Crores as cash credit in favour of defendant no. 1, the applicant bank disbursed an amount of Rs. 8 Crores to defendant no. 1 and further, agreed to advance the balance cash credit subject to the assignment of the HITS license of defendant no. 1 by the MIB as a collateral security for the credit facilities. The defendant no. t had already sought the permission of the MIB for assignment of its HITS license as collateral security for financial assistance vide a letter dated 06.11.2013 (as per Clause 3'3 of the HITS Guidelines). It is submitted that the MIB, vide its Communication dated 03.09.2014 and after a delay of 10 months, arbitrarily and illegally refused to grant a No Objection Certificate to defendant no. 1 to assign its HITS license as collateral security for financial assistance from the applicant bank. The reason accorded for the same was that there was no policy in the MIB to allow HITS service providers to assign their HITS license to banks for raising loans for their HITS operations and hence, the defendant no.l's request could not be acceded to. It is submitted that as per . ../' €).

TA NO. 170112022 8 MIB's policy, distributors similarf placed to defendant no. 1 like Direct-To-Home (DTH) Operators were allowed to use their licenses as collateral security in order to avail credit facilities for working capital from banks and flnancial institutions by entering into a tripartite agreement. Thereafter, aggrieved by the refusal by the MIB to grant permission to assign its HITS license/permission to the applicant bank for raising working capital, defendant no.1 approached the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) in Noida Software Technology Park Limited v. Ministry of Information and Broadcasting, Petition No' 439(C)t2Ol4. By way of the said petition, the defendant no. 1 sought the quashing of the Communication dated 03.09.2014, a declaration that the policy of allowing DTH operators to use their licenses as collateral security should be extended to HITS operators like the defendant no.3 Company as well, and a direction to the defendant Ministry to consider the defendant no'3's request dated 06.11.2013 on its merits. After a detailed final hearing on the matter, the Hon'ble TDSAT vide Final Order and Judgment dated 27.05.2015 was pleased to reject all objections/ reasons of the MIB for refusing defendant no.l's request for the NOC and directed the MIB to take a policy decision with respect to HITS operators and directed it to reconsider the request of defendant no.1 for the NOC, within two months. However, the MIB did not comply with the directions of the Hon'ble TDSAT in Order dated 27.05.2015 and therefore, defendant no.1 was constrained to file M.A.No.251/2015 in Petition No' 439(C)120t4, under Section 20 of the TRAI Act, 1997 for contempt of Order dated 27.05.2015 and appropriate directions which is pending adjudication $

TA NO. 170112022 9 before the Hon'ble TDSAT. When the matter came up for hearing on 11.09.2015 before the Hon'ble TDSAT, the Hon'ble TDSAT was not inclined to accept the submissions of the MIB and granted the MIB three weeks' time to comply with Order dated 27.05.2015. Thereafter, the MIB issued to Defendant No. 1, the Communication dated 05.10.2015 wherein defendant no.1's request dated 06.11.2013 was summarily rejected on the ground the DTH Policy dated 03.12.2009 stands cancelled with immediate effect. The defendant no. I has filed Petition No. 378 of 2016 before the Hon'ble TDSAT assailing the Communication dated 05.10.2015 which is pending adjudication. The applicant bank was in the knowledge of the fact that the MIB had arbitrarily and illegally refused to grant NOC to defendant no. 1 to assign its HITS license to the applicant bank as collateral to avail credit facilities and that the said arbitrary, illegal and discriminatory actions of the MIB had been challenged by the defendant no. 1 before the Hon'ble TDSAT and was pending adjudication. The defendant no. t had vide several written communications regularly updated the applicant bank of the status of the assignment of the HITS license. Vide Letter dated 20.02.2015, the applicant bank wrote to the defendant no. 1 to know about the status of the assignment of the HITS license of defendant no. 1 in its favour and further informed defendant no. 1 that because the assignment had still not been made in hvour of the applicant bank, it was not able to release the remaining 6o0/o working capital. The applicant bank was always in the know of the complications faced by the defendant no. 1 in acquiring the NOC from the MIB for assignment of its HITS license by virtue of the regular communications between the <)

TA NO. 170v2022 l0 officials of defendant No. 1 and the applicant bank. Thereafter, vide Letter dated 09.06.2015, defendant no. 1 informed the applicant bank of the decision of the Hon'ble TDSAT in Petition No. 439(C)/2014. Vide the said letter, the defendant no. 1 fufther requested the applicant bank to revise the then lending rate wherein a penalty of 2o/owas being imposed on it for not availing the sanctioned limib and bring it back to the sanctioned rate of L3.20o/o. Furthermore, vide Letter dated 21.08.2015, the defendant no. 1 apprised the applicant bank that there had been no progress with respect to the framing of guidelines for assignment of HITS license as per the Hon'ble TDSATs decision dated 27.05.2015 in Petition No. 439(C)/2014 for which 2 months'time had been given to the MIB. Since the defendant no. 1 was not hopeful of any early resolution of the matter as the framing of the said guidelines was a procedural matter of the MIB, the defendant no.1 requested the applicant bank to waive the pafticular collateral security of assignment of HITS license of' It is further submifted that vide the said letter, defendant no. 1 also informed the bank that other bankers of defendant no. 1 namely, Punjab National Bank and Indian Ban( had come forward to help defendant no. 1 in the financial crisis being faced by defendant no. 1 through various means namely enhancement of further limits, restructuring of limits, reduction the percentage of collaterals offered, etc. defendant no. 1 requested the applicant bank to follow suit and disburse the balance working capital at 40olo collateral (as was being done at that time by Indian Bank). It was stated that failing the same, defendant no.1 would not be able to procure MDLHES and STBS and supply the same to its Local Cable Operators (LCOs) and subscribers so as to generate <A

TA NO. 170112022 I I substantial revenue and profit as wells as timely servicing of debts. The defendant no. t had started facing financial crisis during the period starting 2014 due to various factors which were completely out of its control. It is submitted that when the defendant no. 1 first commenced its HITS Distribution business, it faced tremendous opposition from the broadcasting sector and had to first approach the Hon'ble TDSAT to get content from broadcasters since broadcasters had refused to even enter into interconnect agreements with it on the basis of its technology, by flling Petition No. 166(C)/2013 which was allowed vide decision dated 12.09.2013. However, even after the Hon'ble TDSAT directed the broadcasters to provide their content to defendant no. 1 on non-discriminatory terms, broadcasters continued discriminating against defendant no. 1 by providing content on highly discriminatory and exorbitant rates which were in blatant and flagrant violation of the Interconnection Regulations. Thereafter, aggrieved by the discriminatory and highly commercially unviable rates being forced upon it, the defendant no. t had to yet again approach the Hon'ble TDSAT vide Petition No' 295(c)120L4. wherein the TDSAT vide its Order dated

07. L2.2015 directed the broadcasters to issue fresh Reference Interconnect Offers (NOs) in compliance with the Interconnection Regulations and enter into fresh, non-discriminatory interconnect agreements with the Respondent Company. However, despite the specific directions of this Hon'ble Tribunal, the broadcasters refused to comply with the same due to which defendant no. 1 was constrained to initiate contempt proceedings against them before this Hon'ble Tribunal which is currently pyfiing adjudication. These <tr.

TA NO. t7012022 t2 actionsofthebroadcasters severely affected the business ofdefendant no. 1. Furthermore, the business of defendant no.l was also adversely affected by the delay in digitization of television signals due to the constant extension in the deadlines for Phase-III of the Digitization project by the MIB and various High Courts across the country. This adversely affected the business between LCOs and defendant no. 1 which consequently affected the revenue generation of the defendant Company. It was during this time that the applicant bank refused to provide the sanctioned cash credit to defendant no. 1 for use as its working capital in order to deal with its financial problems and run its HITS business. Vide another Letter dated 09.09.2015, the defendant no. 1 once again informed the applicant bank about the status of the assignment of the HITS license and that the issue may require further time to be resolved. Therefore, defendant no. 1 requested the applicant bank for a waiver of the condition of tripartite agreement for assignment of HITS license and proposed certain changes in the terms and Vide Lefter dated 27.11.2014, defendant no. t had also previously apprised the applicant bank of the status of the assignment of the HITS license along with a request to execute a consoftium agreement with the other banks that defendant no. t had availed credit from Punjab National Bank and Indian Ban( about which it had been informed earlier. However, no consortium was formed. In the meanwhile, on 13.02.2015, defendant no. 1 wrote to the applicant bank offering additional collateral security in lieu of the HITS license and also informed the applicant bank that it was facing cash flow deficit in its operations and urgently needed funds to make payments to various vendolsz- However, no reply was <T

TA NO. 170112022 13 received from the applicant bank. It is to be noted that as per the terms of the Sanction Letter, in case charge over the HITS License cannot be created, then the defendant herein will have to offer alternate security. It is submitted that in compliance of the terms of the Sanction Letter, the defendant herein offered another collateral security. However, in blatant breach of the terms of the Sanction Letter, the applicant bank herein did not even reply to the letter of the defendant herein, much less complying with the terms of the Sanction Letter. The non-disbursal of the balance cash credit in favour of defendant no.1 affected the operations of defendant no. 1. The defendant no. 1 was under stress was acknowledged by the applicant bank herein for which a meeting of the Joint Lenders Forum (JLF) comprising of the applicant bank, Punjab National Bank and Indian Bank for a Corrective Action Plan (CAP) with respect to defendant no. 1 was called for on 15.02.2016 vide an e.mail by the applicant bank itself. In the said e.mail, the applicant bank stated that the account of defendant no. t had fallen under the category of SMA-2 and the said JLF Meeting was being convened in that regard for the formulation of a CAP for the said account. The directors of defendant no. 1 were also asked to attend the JLF Meeting. The abovementioned JLF Meeting called by the applicant bank was finally held on 20.02.2016 which was attended by representatives from the applicant bank, Punjab NationalBank,Indian Bankand defendant no. 1 wherein the representative of defendant no. 1 explained the factors which hampered the business of defendant No. 1 due to which defendant no. 1 was facing difficulties in fulfilling its commitment to the Applicant Bank. The defendgnt no. 1 requested the V

TA NO. 170112022 14 applicant bank to release the remaining limit of Rs. 17 Crores without insisting upon the assignment of HITS license. However, the applicant bank and the other lenders did not pay any heed to the requests of defendant no. 1 to provide aid to it during its time of financial crisis. It was decided that before arriving at any CAP, the lenders asked defendant no. 1 to clear the irregularity in the respective bank accounts with the said lenders before 16.03.2016 as the same was not of a significant amount and to submit a detailed future business plan along with financing needs. It is submitted that vide e. mail dated t7 .03.20L6, defendant no. t had also written to the applicant bank regarding the exorbitant rate of interest of 18o/o being levied upon defendant No. 1 by the applicant bank and requested for providing the basis of the calculation of the same. However, the applicant bank has not replied to the said E-mail till date. It is submitted that subsequently two more Joint Lenders Meetings were held on 15.07.2016 and 26.07.2016 between representatives of Punjab National Bank, Indian Bank, applicant bank and defendant no. 1 wherein defendant no. 1 envisaged support from its lenders in order to continue with its day-to-day operations. As per the verbal assurances given by the representatives of the said banks, the defendant no. t herein submitted a proposal for continuation of its business and terms of repayment to the banks. However, the Lenders declined the proposal of the defendant no. 1 as they failed to agree upon a lead bank. It is submitted that in order to overcome the financial constraints being faced by it and to return to the path of profitable growth, defendant no.1 required the disbursal of the balance sanctioned cash credit limit, and as has been submi[ed hereinabove, made 5I

TANO. r70U2022 15 repeated and sustained requests to the its lenders including the applicant bank to release the funds and further enhance/grant additional financial facilities in order to ensure continuing business growth and profitability of defendant no.1 and enable it to overcome the said adverse market conditions and financial/capital constraints. Further, since the sanctioned funds were not disbursed on time, several projects of defendant no.1 which were in various stages of execution and implementation got derailed, and ultimately had to be shelved, resulting in heavy losses, both in terms of money and reputation / goodwill in the market. The arbitrary, capricious and mala fide actions of the applicant bank in delaying the disbursement of the sanctioned funds not only compromised the existing projects and ventures of defendant no.1 resulting in loss of capital already invested therein, but also effectively prevented defendant no.l from availing of the extant oppoftunities to recoup its losses and grow its business and profitability. The defendant no.l was thus pushed into a morass of operating losses compounded by ever-increasing interest liability on the facilities already availed, solely on account of the conduct of the applicant bank. The actions of the applicant bank were driven by the motives of taking over control of defendant no.1, and illegally and with mala fide intentions, disposing off the assets of the defendants, and it is to achieve these ends that the applicant bank has deliberately sabotaged the business of defendant no.1 and brought it to a point where there is no option for it than to cease its business activities. The present Original Application is filed without any cause of action as the account of the defendant no. 1 has never been declared as NPA account as per the q TA NO. t70U2022 t6 guidelines Issued by the Reserve Bank of India from time to time and the applicant bank has recalled the credit and loan facilities granted to defendant no.1 at their own whim and fancy, without any legal justification for the same. The applicant bank has failed to demonstrate whether, how and when the account of defendant no.1 became an NPA as per the "Master Circular Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances" dated 01.07.2013 issued by the Reserve Bank of India, which is applicable and binding on all Indian Banks, including the applicant bank. The Original Application, apart from making a bald averment that the account of defendant no.1 was declared as a non-performing asset (NPA) on 29.02.2016, does not speciff the procedure followed by the applicant bank in this regard' The factum of the account of the defendant no' 1 being declared NPA was not specifically communicated to the defendants nor were any reasons provided for the same. These actions of the applicant bank underscore their non- compliance with the binding procedure and mechanism as laid down by the aforesaid master circular which has been held to be binding on all banks vide the judgment of the Hon'ble Supreme Court in Mardia Chemicals v. Union of India 2004 (4) SCC 311' The said ruling casts a mandatory obligation on Indian banks to strictly comply with the procedure and norms as prescribed by the reselve Bank of India from time to time. No material pafticulars have been averred with respect to the circumstances of the alleged recall of the credit and loan facilities granted to defendant no.1, nor have any specific averments made with regard to any alleged default or breach of the terms and conditions of the grant 9! sy:h facilities on the part of (\

TA NO. t70t/2022 t7 defendant no.1, to justify such recall. The applicant bank has admittedly not communicated the factum of declaration of the account of defendant no.1 as "irregular" or NPA, which is a mandatory requirement. The actions of the applicant bank are thus vitiated by material irregularities which render their said actions nullus juris and void ab initio. The burden to prove that all the statutory and regulatory requirements were complied with prior to recall of the flnancial facilities and declaration thereof as "irregular" or "NPA" has not been discharged. As such the present Original Application is liable to be dismissed on this ground alone' The defendant No.1 or any of the other defendanb have never voluntarily defaulted or overdrawn in respect of the credit and loan facilities granted to it and have maintained the financial discipline of the said account' It is submitted that defendant no'1 has been regular in payment of the interest and the other charges in respect of the said credit and loan facilities and has made bona fide and sustained efforts to maintain the financial discipline thereof. It is submitted that the amounts alleged in the Original Application are neither legally due nor legally recoverable by the applicant bank from the defendants. The applicant bank never agreed to any of the proposals made by defendant no' 1 seeking change in terms and conditions of the sanction of the credit facilities extended to it due to the difficulties being faced by defendant no' 1 in arranging for the assignment of its HITS license as a collateral due to the non-cooperation of the MIB and neither did it try to aid defendant no. 1 in any matter whatsoever. The applicant bank always maintained an extremely non- cooperative and hostile attitude towards defendant no. 1 despite being aware about theTefusal of the MIB to q"\

TA NO. 170U2022

grant permission to defendant no.1 to assign its HITS license as collateral in favour of the applicant bank. That the non-cooperation by the MIB to grant permission to assign the HITS license of defendant no. 1 in favour of the applicant bank resulted in non- disbursal of sanctioned cash credit limit to defendant no. 1 by the applicant bank. Due to various factors mentioned hereinabove, defendant no. 1 was already facing flnancial problems and non-disbursal of sanctioned cash credit for working capital by the applicant bank added to this financial crisis and defendant no. 1 faced huge problems in carrying out its day-to-day operations and generating revenue' Although there were huge orders placed for the MDLHES and STBs being supplied by defendant no.1 by Local Cable Operators, due to the inaction on part of the applicant bank, defendant no' 1 was unable to provide equipment in the market on time and thus suffered huge losses' The applicant bank refused to accept alternate forms of collateral offered by defendant no. 1 in order to avail the sanctioned cash credit despite a clear and unequivocal terms in the Sanction Letter dated 27.03.2014 which stated that in case of any dispute related to peffection of security, defendant no. 1 was to arrange for alternate security of equal amount and acceptable to the applicant bank. It is submitted that despite regular follow-up by defendant no. 1, the applicant bank did not accede to any of the requests of defendant no.l and did not accept any of the alternate securities offered by defendant no. 1, despite the earnest efforts made by it, for reasons best known to the applicant bank. Further, the applicant bank never communicated the reasons for refusal to defendant no. 1 nor it did jlrprovide any alternate $..

TA NO. 170y2022

solution. In order to overcome the financial constraints, adverse financial and business environment and return to the path of profitable growth, defendant no.1 required further injection of funds, and as such, made repeated and sustained requests to the applicant bank to release the funds sanctioned to it in order to ensure continuing business growth and profitability of defendant no.1 and enable it to overcome the said adverse market conditions and financial/capital constraints. It is further submitted that several rounds of meetings took place with the offlcials of the applicant bank, and during these meetings, verbal assurances were even made by the officials of the applicant bank as well that the sanctioned financial facilities would be disbursed, upon alternate form of collateral provided by defendant no 1. However, for reasons best known to the officials of the applicant bank and despite the aforesaid assurances that the request of defendant no'1 would be acceded to at the earliest, the sanctioned working capital facilities were not disbursed' The defendants specifically deny the creation and execution of any legally valid, binding or enforceable documents, which purportedly led to the creation of any security in general, as has been alleged in the Original Application' It is submitted that the applicant bank is liable to discharge the onus and burden of proving that any such security was created or any documenb were created and executed, and should be put to strict proof with respect to the same allegations. It is further submitted that whatever documents have been brought on record by the bank are contradictory, vague and far from furthering the claim of the bank, they raise questions as to the factual position laid down by the applicant bank. They suffer from inconsistencies in material pafticulars V

TA NO. 170112022 20 of the claim of the applicant bank, and this clearly shows that all and any documents that have been brought on record by the applicant bank are unreliable, vague, vitiated by fraud and mala fides and cannot be relied on as evidence. The officials of the applicant bank are guilty of breach of trust and misrepresentation with regard to the grant of the credit and loan facilities to defendant no'1, and the conduct of the said facilities. The officials of the applicant bank, at the time of granting the said credit and loan facilities to defendant no.1, had obtained the signatures of defendant nos. 2 to 5 and the officials of defendants no' 1 on a series of POPers, unfilled printed forms, letter heads signed in blank, by exercising commercial duress and coercion upon the defendants, and without even giving the said defendants an opportunity to read or understand the nature and contents of the said documents. This was done on the pretext that copies are required to be sent to the competent authority and various other offices of the applicant bank. The documents filed and relied upon by the applicant bank are thus vitiated by fraud and mala fides, and hence cannot be allowed to be received in evidence. It is submitted that the officials of the applicant bank have subsequently filled in names and figures, and dated the said forms and documents, apparently at the time of the institution of the Original Application, to suit its convenience without the knowledge or consent of the defendants. No cause of action ciln accrue favour of the applicant bank on the basis of such false, fabricated and manipulated documents. The aforesaid submissions specifically apply to all the documents, which purportedly create any security in favour of the applicants, including but no! lirqited to any purpofted v TA NO. t70t/2022 2t Board Resolution by any of the defendants, any General UnderLaking, any General Lien, any Demand Promissory Note, any Loan Agreement, and any purported Personal or Corporate Guarantee, by any of the defendants in favour of the applicant bank. It is further submifted that the defendants specifically dispute the execution of the alleged guarantees, loan agreements, any undertaking, any making, execution of demand promissory notes, and creating of any demand promissory notes as alleged by the applicant bank. The defendants further deny the passing of any board resolution by defendant no. 1 which purportedly acknowledged any liability towards the applicant bank or created any security in favour of the applicant bank. In any event without prejudice to the contentions of the defendants, owing to the gross and grave acts of omissions and commissions, and negligence of the applicant bank, any alleged personal or corporate guarantee, even if held to be validly granted, would automatically stand discharged. The said illegal, arbitrary and mala fide acts attributable to the applicant bank and its concerned officials would also be established during the course of trial and in particular during the cross-examination of such witnesses that may be produced by the applicant bank in support of its case. It is submitted that defendant no.1 has always been diligent and bona fide in its conduct and in its desire to repay the dues of its lenders, and has approached the Applicant Bank time and again with a fair, workable proposal for providing collateral in lieu of the HITS license. It is further submitted that applicant bank has charged and/or claimed interest at illegal, unreasonable and usurious rates, which are liable to be revised downwards by thQ_pn'ble Tribunal. It is g-\

TANO. t70t/2022 22 submitted that this is one of the paramount duties cast on all judicial fora including this Hon'ble Tribunal, the exercise whereof is neither constrained nor curtailed by the provisions of the Banking Regulation Act or the terms of the contract between the parties. It is also settled law that the general guidelines issued by the Reserve Bank of India from time to time do not impinge upon the powers of a court and/or a Tribunal to accord such relief to parties. It is submitted that there exist substantial triable issues of fact in the present case, necessitating a full-fledged trial and cross-examination of the officials of the applicant bank who have dealt with the account of defendant no.l, in relation to and in respect of all the documents filed and relied upon by the applicant bank. It is prayed that this Hontle Tribunal may dismissed and leave may be granted to the defendants to lead evidence on all documents filed by the applicant bank and conduct cross examination of the officials of the applicant Bank.

6. Both the parties have filed their respective evidence. The applicant bank has exhibited its documents. The defendants have failed to exhibit their documents and their right to exhibit documents closed by this Tribunal vide order dated 02.07.2018.

7. Heard the Ld. Counselof the applicant bank and perused the record.

8. The main contention of the defendants in the written statement is that the OA has not been filed by the authorized person and Shri Ravinder Mohan Tlkoo is not the authorized person to file and verifo and sign the OA. Therefore, the OA is liable to be dismissed. From perusal of the record it is clear that the applicant bank has filed relevan, .qrTnO regarding the <)-"

TA NO. t70r/2022 23 authorization of Shri Ravinder Mohan Tlkoo to sign, veriff and institute the OA before this Tribunal. Therefore, there is no ground to reject the OA on this ground.

9. The next contention of the Ld. counsel of the defendant is that the defendants has applied for the cash credit limit of Rs.25 Crores and as per terms and conditions of the sanction letter the collateral security to be provided to the applicant was the assignment of the HITS license issued to defendant no.1 by MIB in favour of the applicant bank. It was also agreed that the defendant no.1 had to create a tripartite agreement as per prescribed format to be executed between the defendant no.l, applicant bank and the MIB. The applicant bank disbursed an amount of Rs.8 Crores to the defendant and further agreed to advance the balance credit subject to the assignment of HITS license of the defendant no.1 by MIB as a collateral security for credit facilities. The defendant has applied for the issuance of the license and sought permission for assignment of his HITS license as collateral security but the MIB after a delay of l0 months dismissed the request of the defendant no.1. The defendant has filed an appeal before the Telecom Disputes Settlement and Appellate Tribunal who has directed the MIB to take fresh decision on the application of the defendant. The MIB has not considered the directions of the Tribunal and has again dismissed the prayer of the defendant. The defendant has again filed a petition before the Appellate Tribunal which is pending adjudication. It is submitted that due to the non issuance of the assignment permission the defendant could not comply the terms of the sanction letter and therefore, the bank has refused to disburse the rest of the amount. The <,\

TA NO. 170112022 24 defendant requested the applicant to take other security but the bank refused to do so and therefore, the business of defendant no.1 collapsed and the defendant no.1 could not pay the amount. It is, therefore, submitted that in such circumstances the defendant no.1 is not liable to pay the dues. But the contention of the defendant has no force. The part amount was disbursed and the remaining amount could not be disbursed due to the non compliance of the conditions of the sanction letter. The defendant utilized the amount disbursed by the bank and therefore, the defendants are duty bound to repay the same. If there is any dispute between the defendants and the Telecom DepartmenVconcerned authority, the applicant bank cannot be blamed, therefore, on this ground the OA cannot be dismissed.

10. The next contention of the defendant is that the applicant bank is charging exorbitant rate of 18olo which is very high. But the contention of the defendant has no force. The bank has levelled the interest as per sanction letter and the agreement entered into between the pafties. Therefore, the contention of the defendant has no force.

11. The next contention of the defendant is that the account of the defendant has been declared NPA against the directions issued by the RBI in Master Circular dated 01.07.2013. It is further submitted that factum of the declaration of the account as NPA has not been communicated to the applicant. Therefore, the OA may be dismissed. But the contention of the defendant has no force. From perusal of the record it is clear that the account has been declared NPA as per RBI 4^

TA NO. 170112022 25 guidelines and the communication of the same has been given to the defendants. t2. The next contention of the defendant is that the applicant has got the signatures of the defendants on blank papers and they have not read out the terms and conditions of the agreement and therefore, these papers cannot be relied upon. But the contention of the defendants has no force. The defendants have started a business of Telecommunication and supplying of the set up box and they are well educated businessman, therefore, it cannot be presumed that they have signed the papers without going through the conditions of the sanction letter. Therefore, on this ground the OA cannot be dismissed.

13. From perusal of the entire evidence, it is clear that the defendants have failed to prove their case as claimed in the written statement. On the other hand, the applicant bank has proved his case against the defendants and therefore, the defendants are liable to pay jointly and severally the amount claimed by the applicant bank and the OAfl-A of the applicant bank is liable to be allowed. In the light of the above discussions, the present TA deserues to be allowed.

ORDER

1) I hereby allow this T.A. of the Applicant Bank and direct the defendant nos. 1 to 9 to pay jointly and severally to the applicant P1lLy,n,n 30 days from eA

TA NO. 170112022 26 today, a sum of Rs.9,62,27,784.86 along with cost, expenses and interest @13.20% from the date of filing of this O.A which has become TA till the date of realization. The defendant no. 3 & 4 as LRs of deceased Dr. linendra Kumar Jain/defendant no.2 are also liable to pay to the applicant bank the amount to the extent of assets inherited by them from deceased Dr. Jinendra Kumar Jain/defendant no.2.

2) In case of failure to deposit the above amount within the stipulated period, the same shall be recovered from the sale of hypothecated assets and the sale of property / built up ground floor without roof rights along with one seruant quarter (at under staircase between ground floor and first floor) area measuring 129 sq. meters out of total land area measuring 153.84 sq. meters, a part of property bearing no. H-31C & 31D, situated at Jangpura Extension, New Delhi and the propefi being Industrial Plot no.69, Block B, Sector 57, Phase III in the layout plan of Noida, U.P admeasuring 800 sq. meters. In case of short fall, the same shall be recovered from the sale of the personal movable and immovable assets of the defendant nos. 1 to 9.

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. *qX"'

TANO. 1701/2022

5) Parties are direct to appear before the Ld. Recovery Officer, DRT-II, Delhi on 06.08.2025. Pending IAs, if any, stand disposed of. File be consigned to records. Date: 06.06.2025 s"\ (susHr L ru-rqnn an*r-ocI ) PRESIDING OFFICER DRT-II, Delhi This judgement has been signed, dated and pronounced in open coutt. , c -i._ _1r (SUSHIL KUMAR RASTOGI) PRESIDII{G OFFTCER DRT-II, Delhi Date :06.05.2025 T