ASREC (India) Limited vs PASUPATI FABRICS LTD. on 27 August 2026

**FINAL ORDER**

1. The present Original Application has been filed by the Applicant / Stressed Assets Stabilization Fund (SASF), on 16.04.2016 under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, against Defendants no. 1 to 4 for seeking recovery of a sum of Rs.1767,25,99,976/- (Rupees One Thousand Seven Hundred Sixty Seven Crore Twenty Five Lakh Ninety Nine Thousand Nine Hundred and Seventy Six only), due and payable as on 01.01.2016 in respect of the said Loans together with further interest and other charges at the contractual rate, on the footing of compound interest, from 01.01.2016 till payment and/or realisation in full alongwith cost of this OA and other relief(s).

1.2 It is pertinent to note here that this OA bearing no. 229/2016 was originally filed before Ld. DRT-II, Delhi, however, in pursuance to Gazette Notification No. 4718 (E)

dated 04.10.2022 issued by Government of India, Department of Financial Services, Ministry of Finance, this case file was transferred by Ld. DRT-II, Delhi to this Tribunal in October 2022 and was numbered at TA-261/2022.

2. It is stated in the OA that IDBI Bank Limited (IDBI) is a Company incorporated under the Companies Act, 1956 and also a Banking Company within the meaning of Section 5 of the Banking Regulation Act, 1949 and having its Registered Office at IDBI Tower, WTC Complex, Cuffe Parade, Mumbai – 400005.

2.1 It is further stated in the OA that the Applicant namely Stressed Assets Stabilisation Fund (hereinafter referred to as 'the Applicant' and / or "SASF") is a Trust constituted by the Central Government under the Trust Deed dated 24.09.2004 and is a Financial Institution within the meaning of Section 2(h)(ii) of the said Act. It is stated that IDBI Bank Limited (IDBI), a company incorporated under the Companies Act, 1956 and a banking company within the meaning of Section 5 of the Banking Regulation Act, 1949, having its Registered Office at IDBI Tower, WTC Complex, Cuffe Parade, Mumbai–400005, had granted certain financial facilities to Defendant No.1, which were subsequently transferred and assigned by IDBI in favour of SASF vide Transfer Deed dated 30.09.2004, whereby IDBI unconditionally and irrevocably transferred and released in favour of SASF all its rights, title and interest in the said loans/facilities, together with the underlying loan agreements, securities, collateral securities, pledges, guarantees and all other attendant rights and interests created by Defendant Nos.1 to 4 in favour of IDBI. As such SASF is legally entitled to file the OA against the Defendants.

It is stated in the OA that this OA is being filed by Sh. S.C. Mathur, Deputy General Manager of SASF who is competent and authorized to file the same by virtue of powers in him vide Resolution dated 05.04.2005 passed by the Board of Trustees of the Applicant authorizing amongst others, the Deputy General Manager of SASF, inter alia to file recovery proceedings, sign, verify documents and depose on behalf of the Applicant.

2.2 The brief facts of the case are that the Defendant No.1, M/s Pasupati Fabrics Ltd., is a company incorporated within the meaning of the Companies Act, 1956, having its Registered Office at Flat No.112, Competent House, F-14, Connaught Place, New Delhi-110001, and had availed various financial facilities from the Applicant. It is also stated that Defendant Nos.2 to 4 stood as personal guarantors for the financial assistance availed by Defendant No.1 and executed unconditional and irrevocable personal guarantees in favour of the Applicant, thereby guaranteeing repayment of the financial facilities granted to Defendant No.1 and due performance of all the terms, conditions and covenants contained in the agreements executed between the Applicant and Defendant No.1 in respect of the said facilities. Further, Defendant No.5 / State Bank of India, had also extended financial facilities to Defendant No.1 and holds a pari-passu charge over the mortgaged assets in respect of the Term Loan sanctioned by it, as well as a second pari-passu charge over the mortgaged assets in respect of the Working Capital facilities sanctioned by it along with the other working capital bankers. Defendant No.5 has been impleaded only as a proforma defendant, as no relief has been claimed against it in the present proceedings.

2.3 It is further stated that in the year 1994, Defendant No.1, M/s Pasupati Fabrics Ltd., approached IDBI seeking financial assistance for setting up a 100% Export Oriented Composite Textile Mill for manufacture of premium cotton, having an installed capacity of 25,200 spindles and 120 looms with adequate processing facilities at Village Nagla Hasanpur, District Mathura, Uttar Pradesh, which proposal was considered by IDBI and, in principle, IDBI agreed to grant a Foreign Currency Loan in various currencies equivalent to Rs.4000.00 Lakh. Pursuant thereto, Defendant No. 1 and IDBI entered into and executed the Foreign Currency Loan Agreement dated 29.08.1994 ("First Loan Agreement"), setting out the terms and conditions governing the said financial assistance [details given in Para 5(v) (a), (b) and (c) of the OA].

2.4 Further, Defendant no. 1 also executed a Deed of Hypothecation dated 29.08.1994 in favour of IDBI [details given in Para 5(vi) of the OA]

2.5 Moreover, Agreement of Guarantee executed by the Defendant no. 2 dated 29.08.1994 and the joint Agreement of Guarantee was executed by Defendants no. 3 & 4 on 30.08.1994.

2.6 Further more, in consideration of the Applicant having agreed to grant and/or having granted the aforesaid loan and having agreed to make disbursements/interim disbursements to Defendant No.1, and as further security for repayment thereof, on 15.12.1994, Defendant No.2, namely Shri Vijay Kumar Jain, Director of Defendant No.1, visited the office of IDBI at Red Cross Building, 1, Red Cross Road, New Delhi-110001, and IDBI, acting as the agent of Defendant No.5, received and accepted from Defendant No. 2 the documents of title, deeds, writings and other documents relating to the immovable properties described herein below, with an intention to create an equitable mortgage in favour of the Applicant as security for the aforesaid loan and all monies payable thereunder, namely, all those pieces and parcels of land or grounds admeasuring approximately 80.86 acres situated at Village Nangla Hasanpur and Navipur, Tehsil Chhata, Kosi Kalan, District Mathura, Uttar Pradesh, together with all buildings, structures, erections and constructions existing or to be constructed thereon, present and future, and all plant and machinery attached to the earth or permanently fastened to anything attached to the earth, including all fixtures and fittings erected, installed or to be attached or installed thereon, and every part thereof. Accordingly, by deposit of the aforesaid title deeds and documents with the requisite intention to create security, an equitable mortgage was created over the said immovable properties in favour of the Applicant, thereby securing the repayment of the loan together with interest, charges, costs, expenses and all other monies payable by Defendant No.1.

It is stated that Shri Vijay Kumar Jain, Director of Defendant No.1 and duly authorized by Defendant No.1 for the purpose, delivered and deposited with IDBI the documents of title, evidences, deeds and writings relating to

the aforesaid immovable properties with the intention of creating security by way of mortgage by deposit of title deeds in favour of the Applicant and State Bank of India (SBI), as security for the due repayment, discharge and redemption by Defendant No.1 of, inter alia, the aforesaid loan together with interest, additional interest, further interest, liquidated damages, commitment charges, premium on prepayment or redemption, costs, charges, expenses and all other monies payable under the First Loan Agreement. Moreover, the particulars of the charges created by Defendant No.1 over its movable and immovable properties in favour of the Applicant in respect of the said loan were duly filed with the concerned Registrar of Companies.

2.7 Thereafter, in the year 1995, Defendant No.1 again approached IDBI seeking additional financial assistance for setting up the aforesaid 100% Export Oriented Composite Textile Mill for manufacture of premium cotton, having an installed capacity of 25,200 spindles and 120 looms with adequate processing facilities at Village Nagla Hasanpur, District Mathura, Uttar Pradesh, which proposal was considered by IDBI and IDBI agreed, in principle, to grant an additional Foreign Currency Loan in various currencies equivalent to Rs.700.00 Lakh.

Pursuant to the sanction of the aforesaid additional financial assistance by IDBI to Defendant No.1, following security documents were executed :-

- (i) Foreign Currency Loan Agreement dated 31.03.1995 (hereinafter referred to as the "Second Loan Agreement") executed between Defendant No.1 and IDBI, setting out the terms and conditions governing the said loan [details given in Para 5(xii) (a), (b) & (c) of the OA];

- (ii) Deed of Hypothecation dated 31.03.1995 executed by Defendant no. 1 in favour of the Applicant [details given in Para 5(xiii) of the OA];

- (iii) Agreement of Guarantee dated 31.03.1995 executed by Defendant no. 2 and the Joint Agreement of Guarantee dated 18.04.1995 executed by the Defendants no. 3 & 4 [details given in Para 5(xiv) of the OA]; 2.8 In consideration of the Applicant having agreed to grant and/or having granted the aforesaid Second Loan and having agreed to make disbursements/interim disbursements to Defendant No.1, and as further security for repayment thereof, on 15.09.1995, Defendant No.3, namely Shri Ramesh Kumar Jain, Director of Defendant No.1 and duly authorized by Defendant No.1 pursuant to the Resolution passed by its Board of Directors at its meeting held on 30.06.1995, visited the office of IDBI at Red Cross Building, 1, Red Cross Road, New Delhi-110001, and IDBI, acting as the agent of Defendant No.5, and delivered and deposited by way of constructive delivery with an intent to create equitable mortgage as security for the aforesaid loan, the documents of title, evidences, deeds and writings of the following immovable properties:- all those pieces and parcels of land or grounds admeasuring approximately 80.86 Acres situated at Village Nangla Hasanpur and Navipur, Tehsil Chhata, Kosi Kalan, District Mathura, Uttar Pradesh, together with all the buildings, structures, erections etc. constructed and/or to be constructed thereon, both present and future, and all plant and machinery attached to the earth or permanently fastened to anything attached to the earth / fixtures and fittings erected / installed or to be attached / installed thereon, and every part thereof.

It is stated in the OA that Sh. Ramesh Kumar Jain, Director of Defendant no. 1 and authorized by the Defendant no. 1 to do so, delivered and deposited with IDBI, the documents of title, evidences, deeds and writings of the aforesaid immovable properties with an intent to create a security by way of mortgage by deposit of title deeds in favour of the Applicant and SBI for the due repayment, discharge and redemption by the Defendant no. 1 Company, amongst others the said Loan together with interest, additional interest, further interest, liquidated damages, commitment charge, premier on prepayment or on redemption, costs, charges, expenses and other monies payable under the said Loan Agreement. In this regard, the Memorandum of Entry dated 18.09.1995 was recorded in the books of IDBI in the ordinary course of its business. Moreover, the Resolution dated 30.06.1995 was passed by the Board of Directors of Defendant No.1 authorizing the creation of the aforesaid mortgage, as submitted to the Applicant.

It is also stated that the particulars of the charges created by Defendant No.1 over its movable and immovable properties in favour of the Applicant as security for the said Loans were duly filed and registered with the concerned Registrar of Companies.

2.9 It is stated in the OA that pursuant to the loan documents executed and the securities created/to be created thereunder, the Applicant disbursed the amount aggregating US\$ 72,61,282.47 (US Dollars Seventy-Two Lakh Sixty- One Thousand Two Hundred Eighty-Two and Cents Forty-Seven only) and INR 242,27,98,298/- (Indian Rupees Two Hundred Forty-Two Crore Twenty-Seven Lakh Ninety-Eight Thousand Two Hundred and Ninety-Eight only) from time to time to the Defendant No.1 under the said Loan Agreements.

2.10 It is also stated in the OA that the Defendant No.1 failed and neglected to repay the said Loans to the Applicant in accordance with the said Loan Agreements and further failed to pay interest and other monies to the Applicant at the rate and in the manner as set out in the said Loan Agreements. The Defendant no. 1 further committed other defaults in performance of the conditions of the said Loan Agreements.

It is further stated that despite assurances, Defendant No.1 failed remedy the defaults and as such, in view of the defaults committed by Defendant No.1 in payment of the principal, interest and other monies under the said Loan Agreements and also in performance of the terms and conditions of the said Loan Agreements, as aforesaid, the Applicant became entitled to recall the entire amounts of the said Loans together with all interest and other monies thereon, under the said Loan Agreements as due and payable forthwith and accordingly, the Applicant called upon the Defendant no. 1 to pay to the Applicant the amounts due to it under the said Loan Agreements vide Recall Notice dated 12.08.2015 with further interest thereon at the contractual rates till payment or realization.

2.11 As Defendant No.1 failed to repay the dues of the Applicant in terms of the said Loan Agreements, the Applicant became entitled to invoke the guarantee(s) furnished by Defendant Nos.2 to 4 in respect of the said Loans. Accordingly, the Applicant vide letters dated 24.09.2015 to the Defendants no. 2 to 4 called upon each of the Defendants in their personal and individual capacity to make payments of the outstanding dues of the Defendant no. 1, jointly and severally under the said Deed(s) of Guarantee in their capacity as guarantors of Defendant No.1.

2.12 It is further stated in the OA that Defendant No.1, in the year 2001, made a reference bearing No.375/2001 under Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA") before the Board for Industrial and Financial Reconstruction ("BIFR"), at the meeting held on 19.05.2010, the Hon'ble BIFR had confirmed its prima facie opinion for winding up of the Appellant (Defendant No.1) as it was not likely to make its net worth exceed its accumulated losses within a reasonable time while meeting its financial obligations. Further, the Hon'ble BIFR found it just, equitable and in the public interest that Appellant (Defendant No.1) be wound up under Section 20(1) of SICA, as it was not likely to become viable on a long-term basis. Aggrieved by the said order dated 19.05.2010, Defendant No.1 preferred Appeal No.195/2010 before the Appellate Authority for Industrial and Financial Reconstruction ("AAIFR"), which, vide order dated 04.06.2015, dismissed the said Appeal. Thereafter, Defendant No. 1 filed M.A. No.11/2015 in Appeal No.195/2010 seeking restoration of the said appeal, which application was also dismissed by the AAIFR vide order dated 09.12.2015.

2.13 It is further stated in the OA that the Applicant issued a notice under Section 13(2) of SARFAESI Act 2002 to the Defendant on 29.06/2007 and the secured assets are yet to be sold in view of interim Order dated 04.02.2010 from Learned Presiding Officer, Debts Recovery Tribunal-III, Delhi restrained SASF from taking possession of the secured property, being land admeasuring approximately 80.86 acres, covered by several Khasra No. falling in the villages Nangla Hasanpur and Navipur, known as UPSIDC-III, Delhi-Agra National Highway, Kosi Kalan-281403, District Mathura (U.P.), till further orders, under the provisions of SARFAESI Act.

2.14 It is stated in the OA that despite the aforesaid notice(s) having been served on the Defendants no. 1 to 4, the Defendants failed and neglected to repay the outstanding of the said Loans to the Applicant. Hence, the Applicant was compelled to filed this OA for recovery of its dues from Defendants no. 1 to 4.

It is also stated in the OA that as such, as on 01.01.2016, following amounts are due and payable by the Defendants no. 1 to 4, jointly and severally to the Applicant :-

<thead> <tr> <th>Loan Details</th> <th>Principal (Rs.)</th> <th>Interest (Rs.)</th> <th>Further Interest (Rs.)</th> <th>Liquidated Damages (Rs.)</th> <th>Total (Rs.)*</th> </tr> </thead> <tbody> <tr> <td>Project Finance Scheme</td> <td>624,89,409</td> <td>18,06,38,967</td> <td>76,55,37,871</td> <td>9,81,03,475</td> <td>1,10,67,69,722</td> </tr> <tr> <td>Project Finance Scheme</td> <td>53,81,462</td> <td>1,60,46,444</td> <td>7,16,22,075</td> <td>2,23,90,953</td> <td>11,54,40,934</td> </tr> <tr> <td>Project Finance Scheme</td> <td>4,84,76,819</td> <td>14,45,48,153</td> <td>64,51,78,834</td> <td>20,16,99,907</td> <td>1,03,99,03,713</td> </tr> <tr> <td>Deferred Interest</td> <td>0</td> <td>13,00,20,863</td> <td>2,71,28,05,431</td> <td>32,10,57,594</td> <td>3,16,38,83,888</td> </tr> <tr> <td>Deferred Further</td> <td>-</td> <td>-</td> <td>1,73,31,91,564</td> <td>19,57,05,179</td> <td>1,92,88,96,743</td> </tr> </tbody> </table>

<tr> <td>Interest</td> <td></td> <td></td> <td></td> <td></td> <td></td> </tr> <tr> <td>Re-schedule</td> <td>64,68,92,864</td> <td>1,75,39,10,071</td> <td>67,95,97,804</td> <td>9,73,96,098</td> <td>10,17,07,41,077</td> </tr> <tr> <td>Grand Total</td> <td>7,63,24,05,54</td> <td>22,25,16,44,98</td> <td>12,72,43,13,819</td> <td>1,81,29,17,206</td> <td>17,52,56,36,077</td> </tr> </table>

\* Dues calculated upto December 31, 2015.

3. Notices of this O.A. were issued to the Defendants, and Defendants no. 1 to 3 appeared through their counsels.

3.1 It is matter of record that Defendants no. 1 to 3 filed their separate WS(s).

3.2 So far as, Defendants no. 4 & 5 are concerned, they neither appeared nor filed any WS before this Tribunal. Hence, the case was proceeded ex parte qua Defendants no. 4 & 5 vide Order dated 22.08.2016 of the Tribunal.

3.3 It is also matter of record that Defendant no. 5 has been impleaded as Proforma Defendant in this OA and no relief is claimed by the Applicant.

4. Defendants no. 1 & 3 have raised similar objections in their separate WS(s) which are as follows:-

(i) Defendants no. 1 & 3 have stated in their respective WS(s) that the present OA has been filed by M/s SASF which claims to be set up, a special purpose vide Trust Deed dated 24.09.2004 for acquiring by transfer the stressed assets of IDBI for administering and managing the stressed assets with a view to recover the amounts due thereunder. It is further stated that in the paper book supplied by the Applicant, there is a Transfer Deed dated 30.09.2004 executed at Mumbai between IDBI and Trustee of SASF constituted under the declaration of Trust

dated 24.09.2004. Now these Defendants have taken a plea that the Trust Deed dated 24.09.2004 is unregistered and in the absence of same nothing is permissible under law. Therefore, the steps taken by the SASF which itself is unregistered trust and in fact no valid Trust, hence, it cannot proceed under the provisions of RDDBFI Act as far as it relates to immovable properties on the basis of unregistered Trust. Further more, the Transfer Deed dated 30.08.2004, which also seems to be unregistered, is stated to have transferred assets / loan accounts in favour of SASF which is itself is an unregistered Trust, hence, it cannot file the OA.

- (ii) Defendants no. 1 & 3 have raised an objection that this OA is not legally maintainable since the document referred to in the OA, have not been filed and the documents so served are also incomplete.

- (iii) Next objection raised by Defendants no. 1 & 3 is that the SASF has not filed the complete statement of account as required as per rules. It is stated that the statement of account is not certified by the officials of the SASF. It is also stated that the IDBI are guilty of charging arbitrary, illegal rate of interest in the account of various loan facility.

- (iv) Defendants no. 1 & 3 have also taken a plea that it is a known fact that the Banks / FIs generally obtain blank documents from the borrowers, those are then later on filled up without the consent or knowledge of the borrower, the same is the position in the instant case also. The documents have been filled up later on, thus making material alterations in the documents. Thus, these documents are void ab initio in the eyes of law.

- (v) Defendants no. 1 & 3 have raised an objection that the OA filed by the SASF are on different causes of action for the different alleged loans granted to the Defendants. As such the OA is barred by Rule 10 of the DRT (Procedure) Rules, 1993.

- (vi) Next objection raised by Defendants no. 1 & 3 is that the documents which are alleged to be basis for the claims made by the IDBI are unenforceable, bad in law, under-stamped, without consideration and therefore, no documents in the eyes of law and as such the OA of the FI is liable to be dismissed with special cost.

- (vii) Defendants no. 1 & 3 have also taken a plea that the OA has not been signed, verified and instituted by a duly authorized and competent person.

- (viii) Defendants no. 1 & 3 have raised an objection that the OA filed by the SASF is barred by limitation. It is stated in the WS that pendency of case before BIFR would not extend the period of limitation for IDBI / SASF.

- (ix) Next objection raised by Defendants no. 1 & 3 is that the Applicant has filed the OA against a dead person and as such the present OA is liable to be dismissed on this very ground alone. It is stated in the WS that Sh. Mukesh Chand Kumar Jain i.e. Defendant no. 4 had died / expired much before filing of the present OA.

- (x) Defendants no. 1 & 3 have raised an objection that the alleged mortgage is not as per law and no documents of title has been filed by the Applicant. It is stated that as per their version, the Defendant no. 1 created equitable mortgage by deposit of title deeds of their immovable properties on 15.12.1994, but no document to this effect has been filed by the Applicant. presuming this to be correct, then also, the OA filed by the Applicant is barred by limitation.

Further more, Defendant no. 1 has also taken addition plea for set off stating that the Defendant no. 1 had business association with IDBI Bank Ltd. It is further stated that the Defendant no. 1 wanted to increase the business and the officials of the IDBI Bank Ltd. assured the Defendants that they would increase the limits once the Defendants get good orders. Accordingly, on the assurances of the officials of IDBI Bank Ltd., the Defendant no. 1 got orders and started placing orders but later on, the officials of the IDBI Bank Ltd. refused to enhance any limits and Defendant no. 1 could not complete the orders and as such suffered huge business losses. Moreover, Defendant no. 1 requested several times to the IDBI Bank Ltd. as well as to Applicant / SASF to reconcile the accounts of the Defendant and to enhance the limits but nothing was done. In the above circumstances, the Defendant no. 1 demand from the Applicant / SASF to pay them a sum of Rs. 1500.0 Crore as set off together with interest along with cost of litigation. It is also stated at in addition to aforesaid loss of Rs. 1500.0 Crore, the Defendant no. 1 is also entitled to claim following losses owing to the aforementioned illegal, arbitrary and malafide actions of the Applicant/SASF and its officials :-

<tr> <td>(i)</td> <td>Towards loss of Goodwill and reputation</td> <td>Rs. 100.0 Crore</td> </tr> <tr> <td>(ii)</td> <td>Towards undue Harassment and Mental Anxiety caused by the illegal actions of the Applicant / SASF</td> <td>Rs. 100.0 Crore</td> </tr> </table>

In the light of above, it has been prayed to dismiss the OA of the Applicant / SASF with costs in favour of the Defendants and the decree be also passed in favour of the Defendants and against the IDBI Bank Ltd. and Applicant / SASF for adjustment / set off and interest to the tune of Rs. 1700.0 Crore along with interest till the full realization of the amount.

5. So far as, Defendant no. 2 is concerned, he has raised following main objections in his WS :-

- (i) Defendant no. 2 has raised an objection that the present plaint / OA has not been signed, verified nor instituted by duly authorized and competent person.

- (ii) Defendant no. 2 has also raised an objection that at the time of opening of the account, various documents, unfilled and undated printed performas, blank letter heads and even unfilled and undated printed performas containing blank spaces upon 

which even revenue stamps had been affixed were obtained by the officers of the applicant bank. The applicant bank and its erring officers have clearly filled in the said papers, documents and letter heads to create and otherwise non-existent cause of action. It is also stated that gross interpolations and manifest material alterations as is evident from the documents in the instant case cannot give rise to a cause of action in favour of the Applicant Bank.

- (iii) Defendant no. 2 has also taken a plea that the applicant bank has debited and claimed and capitalized penal interest from time to time. Moreover, applicant bank has charged illegal, harsh and uxorial interest. Hence, applicant bank must be directed to file a re-casted statement of accounts specifically incorporating therein the various rates of interests, rests and the particulars on which such interest and penal interests have been capitalized and charged and debited from time to time also disclose on what amounts interest and penal interest have been charged and debited from time to time.

- (iv) Defendant no. 2 has also raised an objection that the present suit / OA has not been valued properly for the purpose of application fee. Nor has proper application fee been affixed on the plaint / OA. As such there is no proper suit / OA before the Hon'ble Tribunal.

- (v) Next objection raised by Defendant no. 2 is that the Applicant Bank has arbitrarily, illegally and malafidely sought to unite distinct and separate causes of action, which is prohibited in law. In fact, Rule 10 of the RDB Rules, 1993 prohibits the Applicant Bank from seeking relief or reliefs used on more than a single cause of action in one single application. Hence, the present OA is not maintainable in the present form and deserves it outright dismissal.

- (vi) Defendant no. 2 has also raised an objection that this Tribunal has not got jurisdiction to try and entertain this OA as none of the grounds for filing the OA arose within the territorial jurisdiction of this Hon'ble Tribunal.

- (vii) One more objection raised by Defendant no. 2 is that he resigned from the post of Chairman & Managing Director of M/s Pasupati Fabrics Limited vide the Board Meeting held on 24.09.2007. It is also stated in the WS that the Defendant no. 2 vide Letter dated 16.10.2007 intimated the Applicant Bank regarding the resignation of the Defendant no. 2 and requested to release the personal guarantees & take new management's personal guarantee and relieve the Defendant no. 2 from all responsibilities. Thus, the liability of the defendant stands crystallized from that day.

- (viii) In its preliminary submissions, it is stated in the WS that in 1994, Defendant no. 1 was established under Joint partnership between Mr. Vijay Kumar Jain & Mr. Raj Kumar Jain. The equity share holding pattern has been detailed in Para 12 of Preliminary Submissions. Defendant no. 2 has stated that the Loan was taken in different currencies from the Applicant Bank / IDBI, however, SBI financed the Term Loan in US Dollar only. There was no cost run in the Project except due to cross currency fluctuations the Project Cost escalated. Subsequently, the Public issue failed in June 1996. In 2002, the Defendant no. 1 company filed its reference before the BIFR and in 2006, restructuring package was approved where IDBI felt that the answering Defendant no. 2 is not holding majoring shares hence, they converted 23.0 Crore loan into equity making IDBI as 44% and promoter 16% so that no one can take the management without the consent of IDBI. The new share holding pattern after equity derated by 35% has been detailed in Para 13 of Preliminary Submissions. It is stated that by the end of 2004 or beginning of 2005 disputes were started between Defendant no. 2 / Mr. Vijay Kumar Jain and Mr. Raj Kumar Jain basically due to the revised share holding pattern. The core promoter Defendant no. 2 tried to save the Defendant no. 1 company by doing OTS with IDBI & paid Rs. 5.0 crore to the Applicant Bank but because of the hindrances of Mr. Raj Kumar Jain, the Defendant no. 2 was not able to arrange the balance finance & the OTS failed. It is also stated that the Guarantor & Core Promoter / Defendant no. 2 & his associate companies were holding only 16% shareholding of the Defendant no. 1 company and the attendance and support of the IDBI in the EGM was most essential as their vote would be the deciding factor to decide the management of Defendant no. 1 company, as the IDBI was holding 44% Equity of the Company. It is stated that the Defendant no. 2, even after been given the assurance, the Applicant / IDBI / SASF did not attend the EGM and the entire Board of Directors of the Company was changed. Due to absence of Applicant Bank / IDBI / SASF in the EGM, new Directors Mr. Raj Kumar Jain were appointed leaving Defendant no. 2 alone and one sided on the Board of the Company. It is pertinent to mention that the Defendant no. 2 resigned from the post of Chairman & Managing Director of M/s Pasupati Fabrics Limited vide the Board Meeting held on 24.09.2007. The Defendant no. 2 vide Letter dated 16.10.2007 imitated the Applicant Bank regarding the resignation of the Defendant no. 2 and requested to release the personal guarantees & take new management's personal guarantee and relieve the Defendant no. 2 from all responsibilities. Thus, the liability of the defendant stands crystallized from that day. Further more, Defendant no. 2 wrote a letter dated 02.12.2008 informing the Applicant Bank that the new management is going to sell / dispose off all the assets, stocks, plant & machineries etc. and it was also informed that the stock as on 24.09.2007 was of Rs. 12.0 Crore (approx.) but as per the balance sheet as on 31.03.2008 the stock was reduced to the tune of Rs. 3.28 crore. Further more, 

the Defendant no. 2 wrote a letter dated 04.06.2010 and again brought the various facts to the knowledge of the Applicant Bank. But no action has been taken by the Applicant Bank and new management was disposing off the assets of the Defendant no. 1 Company by illegal means and siphoned the funds of the Company. Moreover, Defendant no. 2 also intimated the Applicant Bank that the new management has sold the free hold land Sondh (Haryana) admeasuring 12 Acres (approx.) @30.0 Lakh per acre and has taken advance for the same without knowledge and consent of SASF, IDBI, SBI, UCO Bank & SBBJ, the Share Holders of the Company which is required u/s 293 (I) (a) of the Companies Act, 1956. Further, Defendant no. 2 intimated the Applicant Bank that the above land Sondh belongs to the Pasupati Fabrics Ltd. as shown on schedule 4 of fixed assets in the Balance Sheet as on 31.03.2009 of Rs. 9,45,000/- and as per notes of Fixed Assets Schedule it was mentioned that full consideration has been paid for free hold land pending registration in the name of the Defendant no. 1 company. Therefore, the above assets actually belongs to the Defendant no. 1 and as on 31.03.2003 as per the Balance Sheet of the Pearl Fabrics Ltd., the Defendant no.1 company does not hold any assets. It is stated by the Defendant no. 2 that in view of the above facts it is crystal clear that the above said land actually belongs to the Defendant no. 1 Company and Mr. Raj Kumar Jain & Ms. Poonam Manshahi has sold the abovementioned 

land as an asset of M/s Pearl Fabrics Ltd. which is clear case of Fraud and Cheating. It is stated in the WS that the Defendant no. 1 was ordered to be wound up provisionally by Hon'ble High Court of Delhi vide its Orders dated 09.07.2010 and the OL attached to Hon'ble Court was appointed as its Provisional Liquidator with the directions to take charge of the property, effects, Books of Accounts assets and other records of the Defendant no. 1 Company. Further, the OL in its letter / notice sent to the District Magistrate / Sub Divisional Magistrate, Sohand, Hodal, Distt. Palwal, Haryana has also mentioned that Sh. Vijay Kumar Jain, Ex.-CMD of the Company (in Prov. Liqn.) had informed that the following lands have been purchased by the Defendant no. 1 / M/s Pasupati Fabrics Ltd. from M/s Pearl Fabrics Pvt. Ltd. and as such belongs to Hon'ble High Court of Delhi through its Official Liquidator. The OL also mentioned and requested to ensure that these lands shall not be transferred or alienated to any other party without obtaining prior permission of Hon'ble High Court of Delhi, as the Defendant no. 1 company is under liquidation with Hon'ble High Court of Delhi. The Defendant no. 2 vide its letter dated 21.02.2011 further intimated the Applicant Bank that Mr. Raj Kumar Jain & Poonam Manshani are doing day light fraud and are center for selling of the assets of the company. Although SBI, UCO Bank & SBBJ has gone in DRT but copy of the case by some of the Bank has not yet given by them to the Defendant no. 2. In the said Letter, the 

Defendant no. 2 has stated about selling of 12 acre land of Sondh by Mr. Raj Kumar Jain & Poonam Manshani and after great difficulties, he became able to take out the certified copy of the same and as per the Registry, Mr. Raj Kumar Jain & Poonam Manshani have sold the property on 12.01.2011 and deposited the money in HDFC Bank Kosikalan A/c Pasupati Fabrics Ltd., paid meager amount to SASF to get the extension and rest of the amount was siphoned by Mr. Raj Kumar Jain & Poonam Manshani. Defendant no. 2 also shown apprehension that Mr. Raj Kumar Jain & Poonam Manshani want to dispose off 52 Acre of Land lying vacant behind the factory. It is further stated that after giving so much information, the Applicant Bank along with SBI, UCO Bank and SBBJ were mum on the subject to restrain the above two persons to stop doing fraud with the above Banks. Defendant no. 2 also requested the Applicant Bank along with other Banks should file a FIR against Raj Kumar Jain & Poonam Manshani for doing the illegal act which they have already done. Thereafter, respondent no. 2 sent another letter dated 10.03.2011 for taking necessary action against the Raj Kumar Jain & Poonam Manshani and also requested the Applicant Bank to update the Defendant no. 2. Subsequently, Defendant no. 2 again wrote a letter dated 21.07.2011 and intimated the Applicant Bank regarding the misappropriation done by Mr. Raj Kumar Jain through it alias Mrs. Poonam Manshani. Thereafter, Defendant no. 2 herein again wrote a 

letter dated 02.09.2011 to the Applicant Bank intimating about misappropriation done by Mr. Ra Kumar Jain through it alias Mrs. Pponam Manshani. It is stated that one more letter dated 20.11.2013 was written by Defendant no. 2 herein wherein it was intimated that National Highway Authority of India had acquired the Frontage Land of M/s Pasupati Fabrics Limited to expand the NH-2 from Four Lane to Eight Lane and the entire said Land is under First pari passu charge with the Applicant Bank / IDBI and SBI and Second pari passu charge with UCO Bank and SBBJ duly registered with UPSIDC. It was further intimated that approximately 0.75 acres was purchased from UPSIDC in 1997, however, it is matter of concern that why the Charge was not created on the abovesaid Land. Defendant no. 2 also intimated the fact that M/s Country Inn Resorts, who shares the common boundary wall with Pasupati Fabrics Ltd. will receive approximately Rs. 7.00 Crore from NHAI within four to five days as their Land frontage has also been acquired. It is also intimated that Frontage Land of Pasupati Fabrics Limited is double the size of M/s Country Inn Resorts, hence, Pasupati Fabrics Ltd. stands to receive approx. Rs. 14.0 crore from NHAI and warned the Applicant Bank that if they shall not take immediate steps to claim this money from NHAI, Faridabad, Haryana, the Applicant Bank / FI & Bank shall be at a great loss. It is also stated in the WS that Defendant no. 2 wrote a letter dated 18.12.2013 to the Defendant no. 5 / SBI and along 

with this letter the Defendant no. 2 also attached the photocopy of the lease agreement dated 12.08.1998 for 2020 sq. mtrs. along with a letter from UPSIDC reference no. 1735/SIDC/RMM dated 10.07.1998. He also attached the copy of lease agreement of 80.86 acre which was purchased by the defendant no. 1 / Pasupati Fabric Ltd. on 12.07.1994 and requested the SBI to refer the letter no. 1682 dated 01.08.1995 written by the Applicant Bank / IDBI to SBI for creating a paripassu charge on the fixed assets including land i.e. 80.86 acre. It is also stated in the WS that the Applicant Bank despite knowing the facts that the Defendant no. 2 has nothing to do with the Defendant no. 1 Company has sent the notice dated 12.08.2015 to the Defendant no. 2, the reply of the said notice was given by Defendant no. 2 vide its Letter dated 25.08.2015.

In nut shell, Defendant no. 2 has raised an objection with regard to not taking any steps by the Applicant with regard to intimation given by Defendant no. 2 in respect of alleged fraud committed by Defendant no. 3 herein and Ms. Poonam Manshani with regard to Sondh property, misappropriation of funds etc. etc.

In support of this contention, Defendant no. 2 has filed following documents along with the WS:-

- (a) Copy of Letter dated 16.10.2007 (Annexure A1)

- (b) Copy of Letter dated 02.11.2008 (Annexure A2)

- (c) Copy of Letter dated 04.06.2010 (Annexure A3)

- (d) Copy of Letter dated 04.06.2010 (Annexure A4)

- (e) Copy of Letter dated 20.09.2010 (Annexure A5)

- (f) Copy of Letter dated 21.02.2011 (Annexure A6)

- (g) Copy of Letter dated 10.03.2011 (Annexure A7)

- (h) Copy of Letter dated 21.07.2011 (Annexure A8)

- (i) Copy of Letter dated 02.09.2011 (Annexure A9)

- (j) Copy of Letter dated 20.11.2013 (Annexure A10)

- (k) Copy of Letter dated 18.11.2013 (Annexure A11)

- (l) Copy of Notice dated 12.08.2015 of Applicant and Reply dated 25.08.2015 of Defendant no. 2 (Annexure A12-colly)

In the light of above, it has been prayed to dismiss the OA with exemplary costs in favour of the Defendant no. 2.

6. To prove its case, the Applicant / SASF leads its evidence by filling the affidavit of Sh. Ambuj Agnihotri, Assistant General Manager of the Applicant.

6.1 Sh. Ambuj Agnihotri, Officer of Applicant / SASF has placed reliance upon the documents filed by the Applicant which includes:-

- (i) Certified copy of Trust Deed dated 24.09.2004 with regard to SASF (Ex. AW1/1);

- (ii) Certified copy of Transfer Deed dated 30.09.2004 executed by IDBI in favour of SASF (Ex. AW1/2);

- (iii) Certified copy of Gazette Notification dated 29.09.2004 issued by Central Government (Ex. AW1/3);

- (iv) Certified copy of the Resolution dated 05.04.2005 passed by the Board of Trustees of the Applicant authorizing amongst others, the Deputy General Manager of SASF to file the OA (Ex. AW1/4);

- (v) Foreign Currency Loan Agreement dated 29.08.1994 executed by Defendant no. 1 and IDBI (Ex. AW1/5);

- (vi) Deed of Hypothecation dated 29.08.1994 executed by Defendant no. 1 (Ex. AW1/6);

- (vii) Agreement of Guarantee executed by the Defendant no. 2 dated 29.08.1994 (Ex. AW1/7);

- (viii) Joint Agreement of Guarantee executed by the Defendants no. 3 & 4 dated 30.08.1994 Ex. AW1/8);

- (ix) Memorandum of Entry dated 16.12.1994 with regard to creation of mortgage by Defendant no. 1 through its Director Sh. Vijay Kumar Jain in respect of land or grounds admeasuring 80.86 acres situated at Village Nangla Hasanpur and Navipur, Tehsil Chhatta, Kosi Kalan, Distt. Mathura, Uttar Pradesh (Ex. AW1/9);

- (x) Foreign Currency Loan Agreement dated 31.03.1995 executed by Defendant no. 1 and IDBI (Ex. AW1/10);

- (xi) Deed of Hypothecation dated 31.03.1995 executed by Defendant no. 1 (Ex. AW1/11);

- (xii) Agreement of Guarantee dated 31.03.1995 executed by Defendant no. 2 (Ex. AW1/12);

- (xiii) Joint Agreement of Guarantee dated 18.04.1995 executed by Defendants no. 3 & 4 (Ex. AW1/13);

- (xiv) Memorandum of Entry dated 18.09.1995 with regard to creation of mortgage by Defendant no. 1 through its Director Sh. Ramesh Kumar Jain in respect of land or grounds admeasuring 80.86 acres situated at Village Nangla Hasanpur and Navipur, Tehsil Chhatta, Kosi Kalan, Distt. Mathura, Uttar Pradesh ( Ex. AW1/14);

- (xv) Board Resolution dated 30.06.1995 passed by the Board of Directors of the Defendant no. 1 in respect of creation of mortgage (Ex. AW1/15);

- (xvi) Office copy of Recall Notice dated 12.08.2015 issued by the Applicant to Defendant no. 1 (Ex. AW1/16);

- (xvii) Office copy of the Letter(s) dated 24.09.2015 issued by the Applicant to Defendants no. 2 to 4 invoking guarantee(s) (Ex. AW1/17);

- (xviii) Copy(s) of the Order dated 10.05.2010 passed by BIFR, Order dated 04.06.2015 (Mark AW1/18); copy of the Order(s) dated 04.06.2015 and 09.12.2015 passed by AAIFR (Mark AW1/19);

- (xix) Office copy of Notice dated 29.06.2007 issued under Section 13(2) of the SARFAESI Act, 2002 by the Applicant to Defendant no. 1 (Ex. AW1/20);

- (xx) Duly certified Statement of Account in respect of Loans of Defendant no. 1 as per Banker's Books of Evidence Act on behalf of Applicant (Ex. AW1/21);

(xxi) Certificate for the rate of interest charged by the Applicant no. 1 from time to time (Ex. AW1/22).

7. So far as, Evidence of Defendants is concerned, Defendant no. 1 has filed its Evidence by way of Affidavit of Ms. Poonam Manshani, AR of Defendant no. 1 and Defendants no. 2 & 3 have filed their own Affidavits.

It is matter of record that Defendants no. 1 & 3 have not filed any documents in support of their WS(s) / evidence.

7.1 So far as, Defendant no. 2 is concerned, he has placed reliance upon following documents:-

- (i) Copy of Letter dated 16.10.2007 (Ex. RW/1)

- (ii) Copy of Letter dated 02.11.2008 (Ex. RW/2)

- (iii) Copy of Letter dated 04.06.2010 (Ex. RW/3)

- (iv) Copy of Letter dated 04.06.2010 (Ex. RW/4)

- (v) Copy of Letter dated 20.09.2010 (Ex. RW/5)

- (vi) Copy of Letter dated 21.02.2011 (Ex. RW/6)

- (vii) Copy of Letter dated 10.03.2011 (Ex. RW/7)

- (viii) Copy of Letter dated 21.07.2011 (Ex. RW/8)

- (ix) Copy of Letter dated 02.09.2011 (Ex. RW/9)

- (x) Copy of Letter dated 20.11.2013 (Ex. RW/10)

- (xi) Copy of Letter dated 18.11.2013 (Ex. RW/11)

- (xii) Copy of Notice dated 12.08.2015 of Applicant and Reply dated 25.08.2015 of Defendant no. 2 (Ex. RW/12-colly)

8. It is matter of record that name of SASF was substituted with Omkara Asset Reconstruction Private Limited vide Order dated 12.12.2024 passed in IA No. 4193/2024.

Subsequently, name of Omkar Asset Reconstruction Private Limited was also substituted with ASREC (India) Limited vide Order dated 28.08.2025 passed in IA No. 636/2025.

In the light of above, it is clear that now ASREC (India) Limited is the Applicant in this OA.

9. It is also matter of record that during the pendency of this OA, Defendant no. 2 herein was expired and his LRs were impleaded in this OA vide Order dated 20.11.2019 passed in IA No. 704/2019.

After their impleadment in the OA, LRs of deceased Defendant no. 2 have also filed reply to the OA stating that they have not inherited or received any income, movable or immovable assets or any other consideration, in cash or kind, directly or indirectly upon the demise of Defendant no. 2 Late Sh. Vijay Kumar Jain in the capacity of the LRs or otherwise. These LRs have also reproduced the main Reply/WS filed by Defendant no. 2 in their Reply to the OA.

10. It is also matter of record that during the pendency of this OA, it was informed by the parties that Defendant no. 4 has already been expired. Thus, Applicant had filed IA No. 1636/2019 as well as IA No. 180/2025 for seeking impleademnt of LRs of deceased Defendant no. 4 but the said IAs were dismissed by the Tribunal vide Order dated 18.04.2024 on the ground that Defendant no. 4 was expired way back in 1997 & this OA was filed in 2016.

11. Heard Ld. counsels for the Applicant Bank and Defendants no. 1 to 3 as well as perused the entire record.

11.1 Now I would like to deal with the objections raised by Defendants no. 1 & 3 in their respective WS(s) in following paras:- 11.2 Defendants no. 1 & 3 have raised similar objections in their separate WS(s) which are as follows:-

- (i) Defendants no. 1 & 3 have stated in their respective WS(s) that the present OA has been filed by M/s SASF which claims to be set up, a special purpose vide Trust Deed dated 24.09.2004 for acquiring by transfer the stressed assets of IDBI for administering and managing the stressed assets with a view to recover the amounts due thereunder. It is further stated that in the paper book supplied by the Applicant, there is a Transfer Deed dated 30.09.2004 executed at Mumbai between IDBI and Trustee of SASF constituted under the declaration of Trust dated 24.09.2004. Now these Defendants have taken a plea that the Trust Deed dated 24.09.2004 is unregistered and in the absence of same nothing is permissible under law. Therefore, the steps taken by the SASF which itself is unregistered trust and in fact no valid Trust, hence, it cannot proceed under the provisions of RDBFI Act as far as it relates to immovable properties on the basis of unregistered Trust. Further more, the Transfer Deed dated 30.08.2004, which also seems to be unregistered, is stated to have transferred assets / loan accounts in favour of SASF which is itself is an unregistered Trust, hence, it cannot file the OA.

I have through the record. The Defendants' objection rests on a fundamental conflation of two distinct legal concepts: (a) assignment of a debt (an actionable claim, which is movable property), and (b) transfer/conveyance of immovable property. This conflation is legally untenable. Section 130 of the Transfer of Property Act, 1882 provides for the transfer of actionable claims. An actionable claim is defined under Section 3 of the TPA as a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the possession of the claimant. The transfer of an actionable claim requires only an instrument in writing signed by the transferor. Upon execution, the transfer is "complete and effectual" and "all the rights and remedies of the transferor" vest in the transferee (Section 130(2), TPA). Further more, Assignment of a debt under Section 130 TPA does not require registration under Section 17 of the Registration Act, 1908. Section 17 mandates registration only for instruments that operate as transfers of immovable property. A debt is not immovable property but a movable/actionable claim. It is a well-established principle that when a debt is assigned, the security interest (whether by way of mortgage, charge, or hypothecation) follows the debt as an incident thereof. The security is ancillary and subordinate to the principal obligation. The Hon'ble Supreme Court in *Narandas Karsondas v. S.A. Kamtam*, (1977) 3 SCC 247, recognized that 

a mortgage exists as security for the debt and cannot subsist independently of the debt obligation. The Transfer Deed dated 30.09.2004 transferred IDBI's debts (loan accounts) to SASF. The security interests (equitable mortgages created in 1995) followed the debt by operation of law. The deed did not purport to convey any specific immovable property from IDBI to SASF. The immovable property continued to belong to the Defendant borrower; what was transferred was the creditor's right to receive money (the debt), and as an incident thereof, the creditor's security interest.

Moreover, Section 28 of the Registration Act mandates registration at the situs of the immovable property only for documents that "affect immovable property." An assignment of a debt does not "affect" immovable property within the meaning of the Registration Act. The mortgage security merely follows the debt as an incident of the assignment. Registration at Mumbai, being the place of execution of the deed where both parties (IDBI and SASF's Trustees) had their offices, was valid and sufficient.

It is clear that the Transfer Deed, was a generic bulk transfer instrument for the assignment of hundreds of stressed loan accounts from IDBI to SASF, containing three Schedules listing borrowers with respective outstanding amounts. This was not a conveyance of specific immovable properties. Requiring such a deed to be registered in every sub- district across India where any borrower's secured property might be situated would be commercially absurd and legally unwarranted.

So far as, another contention of Defendants no. 1 & 3 to the effect that SASF is merely an unregistered trust under the Indian Trust Act, 1882, and that since the Trust Deed dated 24.09.2004 is unregistered, SASF cannot file or maintain the present OA. The Defendants invoke Section 5 of the Indian Trust Act. This Tribunal is of the view that the status of SASF as FI is established by statutory Notification. This contention proceeds on a fundamental misunderstanding of the source of SASF's locus standi. SASF's entitlement to file the OA does not derive from the Trust Deed. It derives from the Central Government Notification dated 29.09.2004 (Exhibit AW-1/3), by which SASF was specified and notified as a "Financial Institution" under Section 2(h)(ii) of the RDDBFI Act, 1993. Further more, Section 2(h) of the RDDBFI Act defines "financial institution" to mean, inter alia :

*"(ii) such other institution as the Central Government may, having regard to its business activity and the area of its operation in India, by notification, specify."*

Once the Central Government has exercised its statutory power under Section 2(h)(ii) and published a notification in the Official Gazette specifying SASF as a Financial Institution, that status is established by force of statute. It confers upon SASF all the rights and entitlements of a Financial Institution under the RDDBFI Act, including the 

right to file Original Applications before the DRT under Section 19.

In the light of above discussion, this objection of Defendants no. 1 & 3 is liable to be rejected and same stands rejected.

- (ii) Defendants no. 1 & 3 have raised an objection that this OA is not legally maintainable since the document referred to in the OA, have not been filed and the documents so served are also incomplete.

On perusal of record, it is clear that the Applicant has filed all the documents relied by it and same have also been duly proved before the Tribunal. Hence, this plea of Defendants does not hold any water and same stands rejected.

- (iii) Next objection raised by Defendants no. 1 & 3 is that the SASF has not filed the complete statement of account as required as per rules. It is stated that the statement of account is not certified by the officials of the SASF. It is also stated that the IDBI are guilty of charging arbitrary, illegal rate of interest in the account of various loan facility.

It is matter of record that the Applicant has already filed duly certified statement of Accounts as per Bankers' Books of Evidence Act as well as certificate for the rate of interest charged by the Applicant (Ex. AW1/21 & AW1/22). On the other hand, Defendants no. 1 & 3 have not chosen to file their own statement of accounts. Even otherwise, no infirmity is found in the respective Statement of Accounts filed by the Applicant in support of this OA.

In the light of above, this Tribunal is of the view that this objection of Defendants no. 1 & 3 is merely a bald allegation without any substantial documentary evidence, hence, same is liable to be dismissed and same stands dismissed.

- (iv) Defendants no. 1 & 3 have also taken a plea that it is a known fact that the Banks / FIs generally obtain blank documents from the borrowers, those are then later on filled up without the consent or knowledge of the borrower, the same is the position in the instant case also. The documents have been filled up later on, thus making material alterations in the documents. Thus, these documents are void ab initio in the eyes of law.

It is matter of record that Defendants no. 1 & 3 have not denied execution of security documents. Even otherwise, in the light of law laid down by the Hon'ble Delhi High Court in the matter of "Indian Bank Vs. Cheese Wafers (India) Pvt. Ltd. wherein it was held if the defendants have not filed any complaint before higher authorities of the bank or filed any complaint before police authorities.....". Thus, the plea of signing the documents under misrepresentation / blank / unfilled documents / without consent, alleged to be misused by the Applicant Banks, is not maintainable after filing of the suit. Accordingly, this objection of Defendants no. 1 & 3 is hereby rejected.

- (v) Defendants no. 1 & 3 have raised an objection that the OA filed by the SASF are on different causes of action for the different alleged loans granted to the Defendants. As such the OA is barred by Rule 10 of the DRT (Procedure) Rules, 1993.

It is matter of record that all the reliefs claimed in the OA are connected to each other. The present OA is filed by the Applicant for the recovery of its dues which are due and payable by the Defendants. The credit facilities sanctioned by the Applicant to the Defendant no. 1 are not denied by the Defendants. Hence, this objection of Defendants no. 1 & 3 is liable to be rejected and same stands rejected.

- (vi) Next objection raised by Defendants no. 1 & 3 is that the documents which are alleged to be basis for the claims made by the IDBI are unenforceable, bad in law, under-stamped, without consideration and therefore, no documents in the eyes of law and as such the OA of the FI is liable to be dismissed with special cost.

This Tribunal is of the view that on this ground, Defendants cannot get absolve from their respective liability being borrower and guarantor. Even otherwise, under Sections 33 to 35 of the Indian Stamp Act, where a document is found insufficiently stamped, the remedy is impounding and payment of the deficit duty along with penalty. Upon such payment, the document becomes admissible. The insufficiency goes to admissibility, not to the validity of the transaction itself. With these observations, this objection of Defendants no. 1 & 3 is hereby rejected.

- (vii) Defendants no. 1 & 3 have also taken a plea that the OA has not been signed, verified and instituted by a duly authorized and competent person.

Record reveals that the Applicant has already filed certified copy of the Resolution dated 05.04.2005 passed by the Board of Directors of Applicant / SASF in favour of DGM of SASF (Ex. AW1/4). I do not find any infirmity and illegality in the same. With these observations, this objection of Defendants no. 1 & 3 stands rejected accordingly.

- (viii) Defendants no. 1 & 3 have raised an objection that the OA filed by the SASF is barred by limitation. It is stated in the WS that pendency of case before BIFR would not extend the period of limitation for IDBI / SASF.

In their WS, the main contention of the Defendants no. 1 & 3 is that the OA is barred by limitation, asserting that the loans were sanctioned in 1994-1995 and that the OA ought to have been filed within three years from the date of NPA classification.

This Tribunal is of the view that the limitation computation in the present case is governed by the interplay of the Limitation Act, 1963 and Section 22(5) of the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA"). Section 22(1) of SICA provides a categorical statutory bar : no suit for recovery of money or for enforcement of any security against a sick industrial company shall lie or be proceeded with during the period from the making of the reference under Section 16 until the sanctioned scheme has been implemented or the company ceases to be a sick industrial company. Whereas, Section 22(5) of SICA provides that in computing the period of limitation for enforcement of any right, remedy, or claim, the period during which proceedings were stayed or enforcement was barred by reason of Section 22(1) shall be excluded. In this regard, Ld. counsel for Applicant has relied upon has relied upon the judgment of Hon'ble Supreme Court in the case of *Ghanshyam Sarda v. Shiv Shankar Trading Company*, (2015) 1 SCC 298.

In the present case the material dates are:-

- (a) Loans sanctioned : 1994-1995;

- (b) Equitable mortgages created : 15.09.1995 and 15.12.1995;

- (c) Defendant No. 1 made Reference to BIFR : 2001 (Ref. No. 375/2001);

- (d) BIFR disposed of Reference : 19.05.2010 (Exhibit AW1/18);

- (e) Appeal filed before AAIFR : Appeal No. 195/2010;

- (f) AAIFR dismissed the Appeal : 04.06.2015 (Exhibit AW1/19);

- (g) Loan recalled : 12.08.2015 (Exhibit AW1/16);

- (h) OA filed : 16.04.2016.

In the light of above, it is clear that the entire period from 2001 (date of BIFR Reference) to 04.06.2015 (date of AAIFR dismissal) – approximately fourteen years – during which the Defendants enjoyed statutory protection under Section 22(1) of SICA, must be excluded from the computation of limitation under Section 22(5).

Even assuming the NPA was declared in or around 1997-1998 (when the three-year period under Article 137 of the Limitation Act would commence), the exclusion of the fourteen-year SICA period (2001–2015) brings the effective limitation expiry date well beyond the filing date of 16.04.2016. therefore, this Tribunal is of the view that the OA is filed well within the period of limitation.

Moreover, after the AAIFR order of 04.06.2015 revived the creditor's right of action, the loan was recalled on 12.08.2015 (within approximately two months), and the OA was filed on 16.04.2016 (within eight months of recall). Even treating the date of recall as a fresh cause of action, the OA is well within the three-year limitation period.

With the above said observations, this objection of Defendants no. 1 & 3 is hereby rejected.

(ix) Next objection raised by Defendants no. 1 & 3 is that the Applicant has filed the OA against a dead person and as such the present OA is liable to be dismissed on this very ground alone. It is stated in the WS that Sh. Mukesh Chand Kumar Jain i.e. Defendant no. 4 had died / expired much before filing of the present OA.

It is matter of record that Applicant had filed IA No. 1636/2019 as well as IA No. 180/2025 for seeking impleadment of LRs of deceased Defendant no. 4 but the said IAs were dismissed by the Tribunal vide Order dated 18.04.2024 on the ground that Defendant no. 4 was expired way back in 1997 & this OA was filed in 2016.

This Tribunal is of the view that this plea is not going to help Defendants no. 1 & 3 for getting them absolve from their respective liability towards Applicant herein.

However, it is matter of record that this OA was filed qua Dead Person i.e. Defendant no. 4 and LRs of deceased Defendant no. 4 were also not taken on record, as discussed above, hence, no final order can be passed qua Defendant no. 4 / dead person. **Now it is directed that the present OA qua Defendant no. 4 stands abated.**

(x) Defendants no. 1 & 3 have raised an objection that the alleged mortgage is not as per law and no documents of title has been filed by the Applicant. It is stated that as per their version, the Defendant no. 1 created equitable mortgage by deposit of title deeds of their immovable properties on 15.12.1994, but no document to this effect has been filed by the Applicant. presuming this to be correct, then also, the OA filed by the Applicant is barred by limitation.

It is matter of record that the Applicant has already filed documents with regard to creation of mortgage viz. memorandum of Entry(s) dated 16.12.1994 and 18.09.1995 (Ex. AW1/9 and AW1/14) and the Defendants have also not denied availment of credit facilities as well as execution of security documents. So far as, question of limitation is concerned, same has already been discussed above and decided in favour of Applicant. Hence, this objection of Defendants no. 1 & 3 is hereby rejected.

Further more, Defendant no. 1 has also taken addition plea for set off and prayed to dismiss the OA of the Applicant / SASF with costs in favour of the Defendants and the decree be also passed in favour of the Defendants and against the IDBI Bank Ltd. and Applicant / SASF for adjustment / set off and interest to the tune of Rs. 1700.0 Crore along with interest till the full realization of the amount but Defendant no. 1 has not filed any documentary evidence in proof of its contention.

This Tribunal is of the view that the burden of establishing a plea of set-off lies squarely on the party raising it. The Defendants must prove: (i) that a legally recoverable ascertained sum is due from the Applicant to the 

Defendants; and (ii) that such claim is within the jurisdiction of this Tribunal. The Defendants have adduced no evidence and a bare assertion in pleadings, unsupported by evidence, cannot reduce or extinguish the proved debt. Accordingly, this plea of set off is liable to be rejected and same stands rejected.

11.3 Now, I would like to deal with the objections raised by Defendant no. 2 in its Reply in following paras:-

- (i) Defendant no. 2 has raised an objection that the present plaint / OA has not been signed, verified nor instituted by duly authorized and competent person.

This plea has already been discussed above and already decided in favour of Applicant while dealing with same objection raised by Defendants no. 1 & 3. Hence, same stands rejected accordingly.

- (ii) Defendant no. 2 has also raised an objection that at the time of opening of the account, various documents, unfilled and undated printed performas, blank letter heads and even unfilled and undated printed performas containing blank spaces upon which even revenue stamps had been affixed were obtained by the officers of the applicant bank. The applicant bank and its erring officers have clearly filled in the said papers, documents and letter heads to create and otherwise non-existent cause of action. It is also stated that gross interpolations and manifest material alterations as is evident from the documents in the instant case cannot give rise to a cause of action in favour of the Applicant Bank.

This plea has already been discussed above and already decided in favour of Applicant while dealing with same objection raised by Defendants no. 1 & 3. Hence, same stands rejected accordingly.

- (iii) Defendant no. 2 has also taken a plea that the applicant bank has debited and claimed and capitalized penal interest from time to time. Moreover, applicant bank has charged illegal, harsh and uxorial interest. Hence, applicant bank must be directed to file a re-casted statement of accounts specifically incorporating therein the various rates of interests, rests and the particulars on which such interest and penal interests have been capitalized and charged and debited from time to time also disclose on what amounts interest and penal interest have been charged and debited from time to time.

This plea has already been discussed above and already decided in favour of Applicant while dealing with same objection raised by Defendants no. 1 & 3. Hence, same stands rejected accordingly.

- (iv) Defendant no. 2 has also raised an objection that the present suit / OA has not been valued properly for the purpose of application fee. Nor has proper application fee been affixed on the plaint / OA. As such there is no proper suit / OA before the Hon'ble Tribunal.

I have gone through the record and found that the Applicant has already deposited maximum court fees of Rs. 1,50,000/- at the time of filing of this OA. Hence, this objection of Defendant no. 2 does not hold any water and same stands rejected.

- (v) Next objection raised by Defendant no. 2 is that the Applicant Bank has arbitrarily, illegally and malafidely sought to unite distinct and separate causes of action, which is prohibited in law. In fact, Rule 10 of the RDB Rules, 1993 prohibits the Applicant Bank from seeking relief or reliefs used on more than a single cause of action in one single application. Hence, the present OA is not maintainable in the present form and deserves its outright dismissal.

This plea has already been discussed above and already decided in favour of Applicant while dealing with same objection raised by Defendants no. 1 & 3. Hence, same stands rejected accordingly.

- (vi) Defendant no. 2 has also raised an objection that this Tribunal has not got jurisdiction to try and entertain this OA as none of the grounds for filing the OA arose within the territorial jurisdiction of this Hon'ble Tribunal.

It is matter of record that the Defendant no. 1 has its registered office within the jurisdiction of this Hon'ble Tribunal and the other Defendants no. 2 to 4 also reside and work for gain in Delhi. \

Section 19(1) of RDB Act, which governs the territorial jurisdiction of Debt Recovery Tribunals (DRTs), states that *an application may be made to*

*the Tribunal within the local limits of whose jurisdiction: (a) The bank or financial institution maintains the account in which the debt is outstanding. (b) The defendant resides, carries on business, or personally works for gain. (c) The cause of action, wholly or in part, arises.*

In these circumstances, the Tribunal is of the considered view that in pursuance to Section 19(1) (b) of the RDB Act, this Tribunal has territorial jurisdiction to entertain this Original Application (OA). Hence, this objection of Defendant no. 2 stands rejected.

- (vii) One more objection raised by Defendant no. 2 is that he resigned from the post of Chairman & Managing Director of M/s Pasupati Fabrics Limited vide the Board Meeting held on 24.09.2007. It is also stated in the WS that the Defendant no. 2 vide Letter dated 16.10.2007 intimated the Applicant Bank regarding the resignation of the Defendant no. 2 and requested to release the personal guarantees & take new management's personal guarantee and relieve the Defendant no. 2 from all responsibilities. Thus, the liability of the defendant stands crystallized from that day.

This Tribunal is of the view that Defendant no. 2 has been impleaded in this OA in the capacity of personal guarantor who executed Agreement of Guarantee dated 30.08.1994 (Ex. AW1/8) as well as Agreement of Guarantee dated 31.03.1995 (Ex.

AW1/12). Even if it is presumed that Defendant no. 2 resigned from the post of Chairman & Managing Director of M/s Pasupati Fabrics Limited vide the Board Meeting held on 24.09.2007, he cannot be absolved from his liability being guarantor as the same has not been released by the Applicant herein till date.

It is also matter of record that Defendant no. 2 has already expired and his LR's have also been taken on record. In these circumstances, it is directed that **the liability of LR's of deceased Defendant no. 2 shall be restricted to the extent of estate inherited by them from deceased Defendant no. 2.**

(viii) Defendant no. 2 has also raised an objection with regard to not taking any steps by the Applicant with regard to intimation given by Defendant no. 2 in respect of alleged fraud committed by Defendant no. 3 herein and Ms. Poonam Manshani with regard to Sondh property, misappropriation of funds etc. etc.

Though, Defendant no. 2 has placed reliance upon various communications done by him with the Applicant but this Tribunal is of the view that this Forum is not an appropriate forum for redressal of such type of grievances raised by Defendant no. 2. Hence, this objection of Defendant no. 2 is hereby rejected.

11.4 So far as, Defendant no. 4 is concerned, since, this OA was filed qua Dead Person i.e. Defendant no. 4 and LR's of deceased Defendant no. 4 were also not taken on record, as discussed above, hence, no final order can be passed qua Defendant no. 4 as well as his LRs by this Tribunal.

11.5 So far as, Defendant no. 5 / SBI is concerned, it is proforma Defendant against which no relief has been claimed by the Applicant.

11.6 On the other hand, the witness of applicant has fully corroborated the averments made in the OA. Even otherwise the whole case of the applicant is based on the documents and the witness has duly proved all these documents. The evidence filed by the applicant gone unrebutted and there is no question of disbelieving the evidence lead by the applicant and applicant has proved its case beyond reasonable doubts. Accordingly, the Applicant is entitled to recover the entire amount, as claimed in the OA from the Defendants along with pendentelite and future interest @1.22% USD Libor (as on date of filing) + 3% p.a. SPREAD = 4.22% p.a. and cost of this OA.

11.7 In this OA, Applicant has prayed to issue recovery certificate against Defendants no. 1 to 4 wherein the Defendant 1 is principal borrower and Defendants no. 2 to 4 are personal guarantors of Defendant no. 1.

11.8 Since, this OA was filed qua Dead Person i.e. Defendant no. 4 and LRs of deceased Defendant no. 4 were also not taken on record, as discussed above, hence, no final order can be passed qua Defendant no. 4 / dead person. **Now it is directed that the present OA qua Defendant no. 4 stands abated.**

11.9 Consequently, TA No. 261/2022 is liable to be allowed in favour of Applicant against Defendants No. 1, 2 & 3 (being Borrower and Personal Guarantors), who are liable to pay the dues of the Applicant along with costs and pendentelite & future interest @1.22% USD Libor (as on date of filing) + 3% p.a. SPREAD = 4.22% p.a. from the date of filing of present OA, till the date of payment in full.

However, it is directed that **the liability of LRs of deceased Defendant no. 2 shall be restricted to the extent of estate inherited by them from deceased Defendant no. 2.**

ORDER

- (i) TA No. 261/2022 stands allowed in favour of Applicant and against the Defendants no. 1 to 3 for a sum of Rs. 1767,25,99,976/- (Rupees One Thousand Seven Hundred Sixty Seven Crore Twenty Five Lakh Ninety Nine Thousand Nine Hundred and Seventy Six only) along with costs and pendentelite and future interest @1.22% USD Libor (as on date of filing) + 3% p.a. SPREAD = 4.22% p.a. from the date of filing of this OA till the realization of the entire dues of the Applicant. However, it is directed that **the liability of LRs of deceased Defendant no. 2 shall be restricted to the extent of estate inherited by them from deceased Defendant no. 2.**

Now Defendants no. 1 to 3 are directed to the aforesaid amount(s) to the Applicant Banks, within 30 days, failing which, the aforesaid amount shall be recovered from the sale of secured assets /

mortgaged properties / hypothecated assets / stocks etc. belonging to Defendants no. 1 to 3.

In case of shortfall, same shall be recovered from the movable and immovable assets of Defendants no. 1 & 3.

- (ii) So far as, Defendant no. 4 is concerned, it is **directed that the present OA qua Defendant no. 4 stands abated.**

- (iii) It is also directed that the Applicant shall adjust the amount(s), if any, received from the Defendants during the pendency of this case.

- (iv) It is also directed that the sale proceeds of the secured assets shall be distributed between the consortium members, as per inter-se agreements executed amongst them.

- (v) The recovery certificate be issued forthwith and be sent to the Recovery Officer-I, Debts Recovery Tribunal-III, Delhi.

- (vi) Parties are directed to appear before the Recovery Officer-I, DRT-III, Delhi on 30.10.2026.

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

File be closed and consigned to records.

(SHIV KUMAR - I) PRESIDING OFFICER, DRT-III, DELHI

(Pronounced in open court) Dated: 27.08.2026