PUNJAB NATIONAL BANK vs FOZAL PVT LTD on 30 August 2025

**FINAL ORDER**

1. 1. This Original Application is being filed on 28.02.2019 under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, by the Applicant Bank, Punjab National Bank, which is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, having its Head Office at Dwarka, New Delhi NSIC, and one of its branches, namely the Assets Recovery Branch, located at NSIC Bhawan, Okhla Phase-III, New Delhi - 110020. The Applicant Bank has perpetual succession, a common seal, and is entitled to sue and be sued in its own name. The present Original Application has been duly signed, verified, and instituted by Mr. H.S. Rawat, Chief Manager, who is a principal officer and duly constituted attorney of the Bank, and is fully competent and authorized to initiate these proceedings on behalf of the Applicant. The Applicant Bank prays that final orders be passed and a Recovery Certificate be issued in its favor and against the Defendants No. 1 to 4, holding them jointly and severally liable for the repayment of the outstanding dues, comprising Rs. 74,53,72,130.26 towards Term Loan-I and Rs. 35,18,19,791.84 towards Term Loan-II, aggregating to a total sum of Rs. 1,09,71,91,923.10/- (Rupees One Hundred Nine Crore Seventy-One Lakh Ninety-One Thousand Nine Hundred Twenty-Three and Paise Ten Only), together with interest at the rate of 13.60% per annum with monthly rests from the date of filing of this Original Application until full and final realization.

1. 2. It is pertinent here that this OA bearing no. 421/2019 was originally filed before Ld. DRT-I, 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-I, Delhi to this Tribunal on 25.10.2022 and was numbered at TA-189/2022.

2. 3. The brief facts of the case are that Defendant No.1, M/s Fozal Power Pvt. Ltd., is a private limited company having its registered office at 1421, 14th Floor, Ansal Tower, 38, Nehru Place, New Delhi-110019, and is the principal borrower in whose favor the credit facilities, including Term Loans and ILC/FLC limits, were sanctioned. Defendant No.2, Mr. K.L. Chugh, the Chairman of Defendant No.1 and the sole proprietor of Defendant No.4, M/s Ultra Buildtech, and Defendant No.3, Mr. Amit Chugh, Managing Director of Defendant No.1, executed personal guarantees dated 16.09.2011 in favor of the Applicant Bank. Defendant No.4, M/s Ultra Buildtech, through its sole proprietor, Defendant No.2, also executed a corporate guarantee for the said facilities. The guarantees executed by Defendants No.2 to 4 are continuing in nature and render them jointly and severally liable for the repayment of the financial facilities availed from the Applicant Bank along with Defendant No.1 for the entire outstanding amount, together with applicable interest, costs, and charges, arising out of the default in repayment of the said loan facilities.

3. 4. So far as, all the Defendants have remained ex parte since 08.03.2024, Despite due and proper service of summons, the Defendants neither entered appearance nor filed any response within the prescribed statutory period. Consequently, proceedings against them were rightly initiated and have continued ex parte. Although the Defendants were served with the complete paper book on 05.07.2019, they filed their Written Statements-cum-Counter Claim only on 19.08.2019, which is beyond the statutory timeline stipulated under Section 19(5) of the RDB Act, 1993. Furthermore, the Defendants failed to file any application seeking condonation of delay in filing the said Written Statements, and thus their delayed filing cannot be considered by this Tribunal in the absence of any explanation or request for condonation.

5. It is further stated that Defendant No. 1 approached the Applicant Bank with a request for financial assistance by way of a Term Loan of Rs. 50.78 crore and an ILC/FLC limit of Rs. 13 crore within the said Term Loan. Upon consideration of the said request, the Applicant Bank was pleased to sanction the following credit facilities in favour of and in the name of Defendant No. 1.

<table border="1"> <thead> <tr> <th>Facility</th> <th>Limit</th> </tr> </thead> <tbody> <tr> <td>Term Loan</td> <td>Rs. 50.78 Crore</td> </tr> <tr> <td>(ILC/FLC within Term Loan)</td> <td>Rs. 13 Crore</td> </tr> </tbody> </table>

6. That Defendant No. 1, vide its Board Resolution dated 14.09.2011, duly accepted the terms and conditions of the sanction and approved the draft loan and security documents in its board meeting. In the said resolution, Shri K. L. Chugh, Chairman, and Shri Amit Chugh, Managing Director of Defendant No. 1, were severally authorized to execute the loan and security documents, to create security over the properties of Defendant No. 1, and to acknowledge the debt on its behalf. Accordingly, in consideration of the sanction and grant of the aforesaid facilities, and in pursuance of the said Board Resolution, Shri Amit Chugh, Defendant No. 3, executed and delivered the loan and security documents on 16.09.2011 and the documents were executed as mentioned below:

16.09.2011 and the documents were executed as mentioned below:

1. i. Facility Term Loan Agreement.

2. ii. Deed of Hypothecation to Secure LC on DA/DP Basis.

3. iii. Agreement of Hypothecation of Current Assets.

4. iv. Deed of Hypothecation.

5. v. Request Letter to purchase/collect/discount cheques/bills.

6. vi. Trust and Retention Account Agreement.

7. vii. Assignment Deed.

7. That the loan sanctioned in favour of Defendant No.1 was to be repaid in 36 quarterly instalments, with the first instalment initially payable on 01.08.2014. The interest was agreed at BR (10.75%) + 2.5% + 0.50%, making an effective rate of 13.75% per annum with monthly rests, payable as and when due, though the interest up to the Commercial Operation Date (COD) of 31.01.2013 was to be capitalised, and thereafter, with effect from 01.02.2013, was to be serviced regularly. On review of the project progress and at the request of Defendant No.1, the Applicant Bank extended the COD from 31.01.2013 to 31.12.2013 and reset the interest rate at 13.50% per annum with monthly rests; consequently, the repayment schedule was revised and the first instalment became payable on 01.07.2015, which was duly conveyed to Defendant No.1 vide sanction letter dated 25.09.2012. Besides creating charge by way of hypothecation, Defendant No.1 also offered personal guarantees: Defendants No.2 and 3 executed a common Agreement of Guarantee dated 16.09.2011, thereby making themselves personally liable for the dues of Defendant No.1, while Defendant No.4, through its sole proprietor Shri K. L. Chugh, executed a separate Agreement of Guarantee dated 16.09.2011, making himself personally liable as well. The liability of Defendants No.2 to 4 under the said guarantees is joint, several, and co-extensive with that of Defendant No.1, and the said guarantees are continuing guarantees. To further secure the facilities, Defendant No.1 also created mortgage by way of deposit of title deeds over its immovable property in favour of the Applicant Bank. the details of mortgage Security as detailed in the record in para (5I).

8. That Defendant No.1 once again approached the Applicant Bank with a request for a fresh Term Loan of Rs. 46.53 crore on account of the increase in capacity of the Hydro Electric Power Project from 9 MW to 12.50 MW. The Applicant Bank, after considering the said request and reviewing the progress of the project, sanctioned a fresh Term Loan of Rs. 46.53 crore in favour of and in the name of Defendant No.1 vide sanction letter dated 11.06.2014.

<table border="1"> <thead> <tr> <th>Facility</th> <th>Limit</th> </tr> </thead> <tbody> <tr> <td>Term Loan-I</td> <td>Rs. 50.78 Crore</td> </tr> <tr> <td>Term Loan-II</td> <td>Rs. 46.53 Crore</td> </tr> <tr> <td>Total</td> <td>Rs. 97.31 Crore</td> </tr> </tbody> </table>

9. That Defendant No.1, vide its Board Resolution dated 02.07.2014, accepted the terms and conditions of the sanction and approved the draft loan and security documents in its board meeting, wherein Shri K. L. Chugh, Chairman, and Shri Amit Chugh, Managing Director of Defendant No.1, were severally authorized to execute the loan and security documents and to create or extend security over the properties of Defendant No.1. Accordingly, in consideration of the fresh Term Loan of Rs. 46.53 crore and in pursuance of the said Board Resolution, Shri K. L. Chugh, Defendant No.2, executed and delivered the loan and security documents, all dated 24.07.2014.

1. i. Facility Term Loan Agreement.

2. ii. Deed of Hypothecation to Secure LC on DA/DP Basis.

3. iii. Agreement of Hypothecation of Current Assets.

4. iv. Deed of Hypothecation.

5. v. Assignment Deed.

6. vi. Request Letter to purchase/collect/discount cheques/bills.

7. vii. Agreement for Pledge of Shares dated 15.09.2014.

1. 10. That in consideration of the aforesaid Term Loans sanctioned in favour of Defendant No.1,2 and 3 stood as guarantors in their personal capacity and executed a common Agreement of Guarantee dated 24.07.2014, thereby making themselves personally liable for the dues of Defendant No.1 to the Applicant Bank, while Defendant No.4, through its sole proprietor Shri K. L. Chugh, executed a separate Agreement of Guarantee dated 24.07.2014, making himself personally liable for the said dues; the liability of Defendants No.2 to 4 being joint, several, and co-extensive with that of Defendant No.1 under continuing guarantees.

2. 11. To further secure the facilities, Defendant No.1 also extended the existing mortgage over its property vide letter dated 26.07.2014. The agreed rate of interest for both Term Loans was at the base rate of 10.25% plus 2.75% and 0.50% Term Premia, making an effective rate of 13.50% per annum with monthly rests, which presently stands at 13.60% per annum with monthly rests, along with penal/additional interest of 2% per annum in the event of default or breach of terms.

3. 12. The loans were repayable in 36 quarterly instalments with the first instalment initially payable on 31.12.2017; however, upon review of the project and at the request of Defendant

No.1, the Commercial Operation Date (COD) was extended from 31.12.2013 to 30.06.2015, and the repayment schedule was accordingly revised with the first instalment made payable on 31.12.2017. Defendant No.1 further acknowledged its liability in its balance sheet as on 31.03.2017 and by executing the Balance and Security Confirmation Letter dated 12.07.2017.

1. 13. The Defendant No.1 was under a contractual obligation to repay the loan in 36 quarterly instalments and to service the interest on a monthly basis as and when due. However, Defendant No.1 failed to honour these obligations by defaulting on both the quarterly instalments and monthly interest payments, and also committed multiple breaches of the terms and conditions of the loan agreement.

2. 14. As a result, the account of Defendant No.1 became irregular and was classified as a Non-Performing Asset (NPA) on 31.03.2018. Despite several reminders and demands by the Applicant Bank, the Defendants failed to regularize the account. On the date of classification as NPA, an amount of Rs. 64,25,77,961.00 was due towards Term Loan-I and Rs. 30,27,11,974.00 towards Term Loan-II. Since the interest for the preceding three months was debited but remained unpaid, a sum of Rs. 13,48,39,555.00 was reversed in Term Loan-I and Rs. 4,53,11,974.00 in Term Loan-II.

3. 15. Post-NPA classification, in accordance with RBI guidelines and prudent accounting practices, no further interest was debited to the account, although the Defendants continued to remain liable for the same. Accordingly, from the date of NPA till the date of filing the present OA, an additional sum of Rs. 73,19,66,622.68 has accrued as interest under Term Loan-I, and Rs. 34,55,23,918.63 under Term Loan-II. Penal interest @ 2% p.a. was also charged, amounting to Rs.

1,33,53,507.59 for Term Loan-I and Rs. 62,95,874.21 for Term Loan-II. Thus, as on the date of filing this OA, the total outstanding amounts to Rs. 74,53,72,130.26 under Term Loan-I and Rs. 35,18,19,792.84 under Term Loan-II, which the Defendants are jointly and severally liable to pay, along with future interest till realisation.

1. 16. The Applicant Bank had also issued a Demand Notice dated 04.09.2018 under Section 13(2) of the SARFAESI Act, calling upon Defendants No.1 to 3 to repay the outstanding dues, and invoked the guarantees of Defendants No.2 and 3 through the same notice. The guarantee of Defendant No.4 was subsequently invoked by letter dated 22.02.2019. However, the Defendants failed to comply with these demands.

2. 17. The cause of action initially arose on 24.07.2014 when the last set of loan and security documents were executed, and further arose on 12.07.2017 when Defendant No.1 acknowledged its liability by signing the Balance and Security Confirmation Letter. The cause of action also arose on 04.09.2018 and 22.02.2019, upon issuance of the said demand notices and invocation of guarantees. The cause of action continues to subsist as the Defendants have failed to discharge their liability.

3. 18. To substantiate its case, the Applicant Bank has filed the affidavit of Mr.H. S. Rawat, Chief Manager, Punjab National Bank, NSIC Bhawan, Okhla Phase-III, New Delhi-110020 and duly authorized and competent to depose this affidavit on behalf of the Applicant Bank. He is fully conversant with the facts and circumstances of the present case, and the present OA has been signed, verified, and instituted by me in my capacity as the principal officer and duly constituted attorney of the Applicant Bank. He has been authorized by virtue of Power of Attorney, marked as Exhibit AW 1/1.

1. i. The Board Resolution dated 14.09.2011 is Ex. AW1/2.

2. ii. The Facility Term Loan Agreement dated 16.09.2011 is Ex. AW1/3.

3. iii. The Deed of Hypothecation to secure LC on DA/DP basis dated 16.09.2011 is Ex. AW1/4.

4. iv. The Agreement of Hypothecation of Current Assets dated 16.09.2011 is Ex. AW1/5.

5. v. The Deed of Hypothecation dated 16.09.2011 is Ex. AW1/6.

6. vi. The Trust and Retention Account Agreement dated 16.09.2011 is Ex. AW1/7.

7. vii. The Assignment Deed dated 16.09.2011 is Ex. AW1/8.

8. viii. The Request Letter to Purchase/Collect/Discount Cheques/Bills dated 16.09.2011 is Ex. AW1/9.

9. ix. The Agreement of Guarantee dated 16.09.2011 executed by Defendants No. 2 and 3 is Ex. AW1/10 and by Defendant No. 4 is Ex. AW1/11.

10. x. The Letter for Confirmation of Mortgage Creation dated 21.09.2011 is Ex. AW1/12.

11. xi. The Sale Deed dated 10.03.2013 (Khasra No. 848/2 and 848/3) is Ex. AW1/13.

12. xii. Sale Deed dated 10.03.2013 (Khasra No. 835, 836, 837 - 2/3rd share) is Ex. AW1/14.

13. xiii. Sale Deed dated 05.02.2015 (1/3rd share) is Ex. AW1/15;

14. xiv. Sale Deed under Award dated 12.08.2011 (0-41-88 hectare) is Ex. AW1/16.

15. xv. Sale Deed under Award dated 12.08.2011 (1-03-49 hectare) is Ex. AW1/17.

- xvi. The revised Sanction Letter dated 25.09.2012 is Ex. AW1/18.

- xvii. The Letter of Mortgage Confirmation dated 07.06.2013 is Ex. AW1/19.

- xviii. The Sanction Letter for Rs. 46.53 crore dated 11.06.2014 is Ex. AW1/20.

- xix. The Board Resolution dated 02.07.2014 is Ex. AW1/21.

- xx. The Facility Term Loan Agreement dated 24.07.2014 is Ex. AW1/22.

- xxi. The Deed of Hypothecation to secure LC dated 24.07.2014 is Ex. AW1/23.

- xxii. The Agreement of Hypothecation of Current Assets dated 24.07.2014 is Ex. AW1/24.

- xxiii. The Deed of Hypothecation dated 24.07.2014 is Ex. AW1/25.

- xxiv. The Assignment Deed dated 24.07.2014 is Ex. AW1/26.

- xxv. The Request Letter to Purchase/Collect/Discount Cheques/Bills dated 24.07.2014 is Ex. AW1/27.

- xxvi. The Agreement for Pledge of Shares dated 15.09.2014 is Ex. AW1/28.

- xxvii. The Agreement of Guarantee dated 24.07.2014 by Defendants No. 2 and 3 is Ex. AW1/29 and by Defendant No. 4 is Ex. AW1/30.

- xxviii. The Letter of Continuity dated 26.07.2014 is Ex. AW1/31.

- xxix. The Letter for Confirmation of Mortgage Creation dated 19.02.2015 is Ex. AW1/32.

- xxx. The Audited Balance Sheet dated 31.03.2017 is Ex. AW1/33.

A solid green rectangular box is positioned at the bottom center of the page, below the list of documents.

- xxxii. The Balance and Security Confirmation Letter dated 12.07.2017 is Ex. AW1/34.

- xxxiii. The Statement of Account and Interest Calculation Sheet for Term Loan-I is Ex. AW1/35 and for Term Loan-II is Ex. AW1/36.

- xxxiiii. The Demand Notice under Section 13(2) of SARFAESI Act dated 04.09.2018 is Ex. AW1/37.

- xxxv. The Guarantee Invocation Notices dated 04.09.2018 for Defendants No. 2 and 3 are Ex. AW1/38 and AW1/39, and for Defendant No. 4 dated 22.02.2019 is Ex. AW1/40.

19. The witness of Applicant Bank has fully corroborated the averments made in the OA. Even otherwise the whole case of the Applicant Bank is based on the documents and the witness has duly proved all these documents. The evidence filed by the Applicant Bank gone unrefuted and there is no question of disbelieving the evidence lead by the Applicant Bank and Applicant Bank has proved its case beyond reasonable doubts. Accordingly, the bank is entitled to recover the entire amount along with pending interest and future costs as agreed between the parties. I hereby allow this OA as the Applicant Bank has proved its claim beyond any doubt.

14. In this TA, Applicant Bank has prayed to issue recovery certificate against Defendants No. 1 to 4. In the present matter, Defendant No.1, M/s Fozal Power Pvt. Ltd., is the principal borrower, a private limited company to whom the Applicant Bank sanctioned Term Loans and ILC/FLC limits. Defendant No.2, Mr. K.L. Chugh, Chairman of Defendant No.1 and sole proprietor of Defendant No.4, and Defendant No.3, Mr. Amit Chugh, Managing Director of Defendant No.1, executed personal guarantees dated 16.09.2011 in favor of the Bank. Defendant No.4, M/s Ultra Buildtech, through Defendant No.2, also executed a corporate guarantee. All guarantees are continuing in nature, rendering Defendants No.2 to 4 jointly and severally liable with Defendant No.1 for repayment of the outstanding dues, interest, and charges.

1. 15. Consequently, TA No. 189/2022 stands allowed in favour of Applicant Bank and against Defendants No. 1 to 4, who are liable to pay the dues of the Applicant Bank along with costs and pendentelite& future interest@ 13% per annum, as claimed in the OA, from the date of filing of present OA, till the date of payment in full.

ORDER

TA No. 189/2022 stands allowed and the Defendants No. 1 to 4 are directed to pay to the Applicant Bank, within 30 days, a sum of Rs. 1,09,71,91,923.10/- (Rupees One Hundred Nine Crore Seventy-One Lakh Ninety-One Thousand Nine Hundred Twenty-Three and Paise Ten Only) less the amount received from the sale/ release of mortgaged propertiesalong with cost and pendentelite and future interest, as claimed in OA i.e. @ 13% per annum rests from the date of filing of this OA till the date of realization failing which, the aforesaid amount shall be recovered from the sale of hypothecated/charged stocks/tangible movables and available mortgaged properties.

Further, in case of shortfall, the same shall be recovered from the sale of movable and immovable assets of the Defendants No. 1 to 4.

It is also directed that the applicant shall adjust the amount(s), if any, received during the pendency of this case.

- (i). The recovery certificate be issued forthwith and be sent to the Recovery Office-II, Debts Recovery Tribunal-III, Delhi.

- (ii). Parties are directed to appear before the Recovery Officer-II, DRT-III, Delhi on 13.10.2025.

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

File be closed and consigned to records.

(Pronounced in open court)

Dated: 30.08.2025

K. Singh

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