UNION BANK OF INDIA vs HANUNG TOYS AND TEXTILES on 17 October 2025

FINAL ORDER

1. This original application has been filed by the applicant bank, on 02.09.2015, through Mr. I. P. Yadav, Assistant General Manager of Applicant Bank, being authorized representatives of Applicant Bank, under Section 19 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 against the defendants no. 1 to 11 for recovery of a sum of Rs. 105,33,60,421.84 (Rupees One Hundred Five Crore Thirty Three Lakh Sixty Thousand Four Hundred Twenty One and Paise Eighty Four only) being the principal amount under the aforesaid Cash Credit facilities with interest adjudged as on 31.07.2015 together with pendentelite and future interest i.e. @11.00% p.a. under aforesaid facilities with monthly rests w.e.f. 01.08.2015 till realization with Additional interest @2% p.a. over and above normal interest is also chargeable on NPA account along with all costs, charges and other relief(s).

1.2 It is pertinent to note here that this OA bearing no. 395/2015 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 November 2022 and was numbered at TA-389/2022.

2. The brief facts of this case are that the Applicant Bank is a body Corporate with perpetual succession constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act. It is further stated that the present OA is being instituted by duly authorized official of applicant bank namely Mr. I.P. Yadav, Assistant General Manager of the applicant bank who has been duly authorized by the applicant bank through Power of Attorney executed in his favour.

2.1 It is stated in the OA that the Defendant No. 1 Company is a Limited Company which is being prosecuted through its Directors /authorized signatory. The defendant no. 1 has been the Principal borrower of the applicant bank to the credit facilities exclusively sanctioned by the applicant bank to the tune of Rs. 106.46 crore to the defendant no. 1 company and defendants no. 2 to 4 are the personal guarantors / directors and defendants no.5 to 11 are the corporate guarantors who signed and executed their personal and corporate guarantees respectively, in order to secure Cash Credit facilities as advanced / granted by the applicant bank to the defendant no. 1 company lastly on 30.03.2014 to the tune of Rs. 106.46 crore exclusively granted by the applicant bank as detailed below for which the present OA is being filed.

It is stated that the Defendant No. 12 to 27 are being impleaded being the Lead bank and the consortium members under the Consortium Agreement duly executed between defendant no.1 company, applicant bank and defendants no.12 to 27. Moreover, defendants no.12 to 27 are having pari passu charge over the movable and immovable secured assets and they have been impleaded as performa parties and as such no relief is being claimed against these defendants.

2.2 It is stated in the OA that the defendant no.1 company had been availing of credit facilities from the applicant bank since 2006 and thereafter on 24.12.2009, the defendant no. 1 company through its Managing Director / authorized signatory, was sanctioned a packing credit / FDBP / FUDBP for a sum of Rs.35.0 crore and Inland Letter of Credit (ILC/FLC 180 days for Rs. 15.0 crore vide letter of sanction dated 24.12.2009 total amounting to Rs.50.0 crore which were further renewed / enhanced in month of January 2010 to the tune of Rs. 60.0 crore and various security and loaning documents have also been signed and executed by the defendant no.1 company through its authorized signatory, dated 01.02.2010 and 02.02.2010 in favour of the applicant bank as detailed below :-

- (i) Demand Promissory Note dated 01.02.2010 for Rs. 42.0 crore;

- (ii) Demand Promissory Note dated 01.02.2010 for Rs. 18.0 crore;

- (iii) Composite Hypothecation deed (SD-20) dated 02.02.2010 for Rs. 60.0 crore;

- (iv) Letter of continuity (AD-09) dated 01.02.2010 for Rs. 42.0 crore;

- (v) Letter obtained from Directors (AD-10) dated 01.02.2010;

- (vi) Packing Credit Agreement (SD-04) dated 02.02.2010;

- (vii) Letter of Hypothecation of Bills (SD-17) dated 02.02.2010;

- (viii) Letter of Undertaking Not to Alienate Hypothecated Goods (AD-12) dated 02.02.2010 for a sum of Rs.42.0 crore;

- (ix) Trust Receipt (AD-06) dated 01.02.2010.

Moreover, in consideration of the grant / sanction of said Cash Credit facility as advanced by the applicant bank in favour of the defendant no. 1 company as aforesaid, defendants no. 2 & 3 also signed and executed their deed of guarantee in continuous nature in favour of the applicant bank in Bank form SD-01 dated 02.02.2010 to the tune of Rs. 60.0 crore.

Similarly, the defendants no. 5 to 11 signed and executed their deed of Corporate guarantee in continuous nature in favour of the applicant bank in Bank form SD-01 dated 02.02.2010 to the tune of Rs. 60.0 crore.

2.3 It is stated in the OA that that the aforesaid facilities as advanced to defendant company have further been renewed / reviewed / enhanced by the applicant bank from total limit of Rs. 60.0 crore to Rs. 80.40 crore i.e.

- (i) Cash Credit (H) / Packing Credit / FDBP / FUDBP Rs. 49.00 crore

- (ii) PCFC Standby Export Limits Rs. 13.40 crore

(iii) Inland Credit of Credit Rs.18.00 crore vide Letter of Sanction dated 06.09.2012 for total amounting Rs. 80.40 crore and various security and loaning documents have also been signed and executed by the defendant no. 1 company through its authorized signatory on 24.09.2012 in favour of the applicant bank.

In consideration of the aforesaid credit limits / facilities granted by the applicant bank in favour of the defendant no. 1 company, the defendant no. 1 company signed, executed and delivered the following security documents in favour of the applicant bank on 24.09.2012 to the tune of Rs. 80.40 crore :-

- (i) Composite Hypothecation deed (SD-20) dated 24.09.2012 for Rs. 80.40 crore;

- (ii) Packing Credit Agreement (SD-04) dated 24.09.2012 for Rs. 58.80 crore;

- (iii) Letter of Undertaking Not to Alienate Hypothecated Goods (AD-12) dated 24.09.2012 for Rs. 58.80 crore;

- (iv) Letter of Undertaking Not to Alienate Hypothecated Goods (AD-12) dated 24.09.2012 for Rs. 21.60 crore;

- (v) Letter of continuity (AD-09) dated 24.09.2012 for Rs. 58.80 crore;

- (vi) Letter of continuity (AD-09) dated 24.09.2012 for Rs. 21.60 crore;

- (vii) Demand Promissory Note dated 24.09.2012 for Rs. 58.80 crore with minimum of Rs. 12.00%;

- (viii) Demand Promissory Note dated 24.09.2012 for Rs. 21.60 crore;

- (ix) Letter obtained from Directors (AD-10) dated 24.09.2012;

- (x) Letter of Hypothecation of Bills (SD-17) dated 24.09.2012;

- (xi) Agreement on rate of interest dated 24.09.2012.

Moreover, in consideration of the grant / sanction of said Cash Credit facility as advanced by the applicant bank in favour of the defendant no. 1 company as aforesaid, defendants no. 2 to 4 also signed and executed their deed of guarantee in continuous nature in favour of the applicant bank in Bank form SD-01 dated 24.09.2012 to the tune of Rs. 80.40 crore.

Similarly, the defendants no. 5 to 11 signed and executed their deed of Corporate guarantee in continuous nature in favour of the applicant bank in Bank form SD-01 dated 24.09.2012 to the tune of Rs. 80.40 crore.

2.4 It is stated in the OA that the defendant no. 1 company has also availed an ad-hoc Packing Credit Limit of Rs. 5.0 crore vide letter of sanction dated 27.09.2012 which was further secured by signing and executing the security and loaning documents and personal and corporate guarantees dated 28.09.2012 to the total of Rs. 85.40 crore in favour of the applicant bank.

2.5 It is also stated in the OA that it is pertinent to mention here that the aforesaid credit facilities of Rs. 80.40 crores were further renewed in the month of September 2013 which has been duly acknowledged vide Board of Directors of the defendant no. 1 company held on 03.09.2013 and necessary security and loaning documents have been duly signed and executed by defendants no.1 to 11 on 06.09.2012 in favour of the applicant bank as under:-

- (i) Composite Hypothecation deed (SD-20) dated 06.09.2013 for Rs. 80.40 crore;

- (ii) Packing Credit Agreement (SD-04) dated 06.09.2013 for Rs. 80.40 crore;

- (iii) Demand Promissory Note dated 06.09.2013 for Rs. 58.80 crore;

- (iv) Hypothecation Agreement of Goods & Debts (SD-06) dated 06.09.2013 for Rs. 21.60 crore;

- (v) Demand Promissory Note dated 06.09.2013 for Rs. 21.60 crore;

- (vi) Letter of Undertaking Not to Alienate Hypothecated Goods (AD-12) dated 06.09.2013 for Rs. 21.60 crore;

- (vii) Letter of continuity (AD-09) dated 06.09.2013 for Rs. 58.80 crore;

- (viii) Letter of continuity (AD-09) dated 06.09.2013 for Rs. 21.60 crore.

Moreover, in consideration of the grant / sanction of said Cash Credit facility as advanced by the applicant bank in favour of the defendant no. 1 company as aforesaid, defendants no. 2 to 4 also signed and executed their deed of guarantee in continuous nature in favour of the applicant bank in Bank form SD-01 dated 06.09.2013 to the tune of Rs. 80.40 crore.

Similarly, the defendants no. 5 to 11 signed and executed their deed of Corporate guarantee in continuous nature in favour of the applicant bank in Bank form SD-01 dated 06.09.2013 to the tune of Rs. 80.40 crore.

2.6 It is stated in the OA that that the aforesaid facilities as advanced to defendant no. 1 company have further been renewed / reviewed / enhanced by the applicant bank on 30.03.2014 from total limit of Rs. 80.40 crore to Rs.106.46 crore i.e.

(i)	Cash Credit (H)	Rs. 45.35 crore
(ii)	WCTL	Rs. 41.83 crore
(iii)	FITL	Rs. 19.28 crore

vide Letter of Sanction dated 30.03.2014 for total amounting Rs. 106.46 crore and various security and loaning documents have also been signed and executed by the defendant no. 1 company through its authorized signatory on 30.03.2014 in favour of the applicant bank as under:-

- (i) Demand Promissory Note dated 30.03.2014 for Rs. 45.35 crore;

- (ii) Demand Promissory Note dated 30.03.2014 for Rs. 41.83 crore;

- (iii) Demand Promissory Note dated 30.03.2014 for Rs. 19.28 crore;

- (iv) Composite Hypothecation deed (SD-20) dated 30.03.2014 for Rs. 106.46 crore;

- (v) Hypothecation Agreement of Goods & Debts (SD-06) dated 30.03.2014 for Rs. 45.35 crore;

- (vi) General Term Loan Agreement (SD-18) dated 30.03.2014 for Rs. 41.83 crore;

- (vii) Term Loan Agreement (SD-19) dated 30.03.2014 for Rs. 41.83 crore;

- (viii) General Term Loan Agreement (SD-18) dated 30.03.2014 for Rs. 19.28 crore;

- (ix) Term Loan Agreement (SD-19) dated 30.03.2014 for Rs. 19.28 crore;

- (x) Letter of acceptance of terms and conditions of grants dated 30.03.2014;

- (xi) Letter of Undertaking Not to Alienate Hypothecated Goods (AD-12) dated 30.03.2014 for Rs. 45.35 crore;

- (xii) Letter of continuity (AD-09) dated 30.03.2014 for Rs. 45.35 crore;

- (xiii) Letter obtained from Directors (AD-10) dated 30.03.2014.

Moreover, in consideration of the grant / sanction of said Cash Credit facilities of Rs. 106.46 crore as advanced by the applicant bank in favour of the defendant no. 1 company as aforesaid, defendants no. 2 to 4 also signed and executed their deed of guarantee in continuous nature in favour of the applicant bank in Bank form SD-01 dated 30.09.2014 to the tune of Rs. 106.46 crore.

Similarly, the defendants no. 5 to 11 signed and executed their deed of Corporate guarantee in continuous nature in favour of the applicant bank in Bank form SD-01 dated 30.09.2014 to the tune of Rs. 106.46 crore.

2.7 It is stated in the OA that the defendants hereinabove, besides the signing and execution of security / loaning documents and personal / corporate guarantees, as aforesaid, in order to further secure the aforesaid credit facilities, have also created an equitable mortgage in favour of the applicant bank on pari passu basis, with Consortium Bank wise and Punjab National Bank, Sansad Marg, New Delhi (being Lead Bank under the Consortium Agreements) i.e. the defendant no.12 and in respect of the properties (belonging to defendants no. 1, 2, 3, 5, 6, 7, 8 and 9), by deposit of title deeds in this regard [details of said properties have been given in Para 5(XX) (I) to (IX) of the OA].

Besides the above, the defendant no. 1 company has also secured the aforesaid credit facilities by way of hypothecation of entire fixed assets, plant, machinery etc. of defendant no. 1 company on second pari passu charge basis excluding those assets specifically charged to other banks/FIs.

Further more, besides the aforesaid, in order to further secure the aforesaid credit facilities, the defendant no. 1 company has also hypothecated its stocks and book debts, with the applicant bank in terms of the security documents executed as stated above.

2.8 It is stated in the OA that the defendants no. 1 to 11 have failed to adhere to the fiscal discipline as imposed upon the defendants by the applicant bank in accordance with the terms and conditions of the grant of the facilities in this behalf. As such, on account of persistent default on part of the defendants to pay the interest, overdue or outstanding of the applicant bank as per the terms and condition in that regard, the subject loan account of the defendant no.1 became irregular and the entire outstanding in the concerned loan account became recoverable. Due to the persistent irregularities, aforesaid loan account of the defendant no. 1 company was classified as NPA on 30.06.2014 and the applicant bank was forced to recall the outstanding in the account vide Legal Recall Notice dated 02.06.2015 sent to the defendants no.1 to 11 to pay the dues of the applicant bank. Moreover, the applicant bank also issued demand notice dated 03.07.2015 under Section 13(2) of the SARFAESI Act, 2002 calling upon the defendant no. 1 to 11 to pay the dues of the bank but till date nothing has been repaid by the defendants.

It is stated in the OA that there has been an outstanding of Rs.105,33,60,421.84 with interest charged @11.00 & 10.50% p.a. with monthly rests upto 31.07.2015 being the principal amount with interest under the aforesaid credit facilities in favour of the applicant bank and against the defendants as detailed below :- <table border="1"> <thead> <tr> <th>Nature of Facility</th> <th>A/c Number</th> <th>Sanctioned Amount</th> <th>Outstanding as on 31.07.2015</th> </tr> </thead> <tbody> <tr> <td>CC(H)</td> <td>307805010926269</td> <td>Rs. 45.35 crore</td> <td>Rs.45,63,83,779.84</td> </tr> <tr> <td>WCTL</td> <td>307806310000002</td> <td>Rs. 41.83 crore</td> <td>Rs. 46,43,48,281.00</td> </tr> <tr> <td>FITL</td> <td>307806310000003</td> <td>Rs. 19.28 crore</td> <td>Rs. 13,26,28,361.00</td> </tr> <tr> <td>Total</td> <td></td> <td>Rs. 106.46 crore</td> <td>Rs.105,33,60,421.84</td> </tr> </tbody> </table>

Hence, defendants no.1 to 11 are jointly and severally liable to pay along with pendentelite and future interest i.e. @11.00 % under aforesaid limits, additional interest @2% p.a. on account of account being NPA category with monthly rests is chargeable from 01.08.2015 till realization.

2.9 It is stated in the OA that since the defendants no. 1 to 11 have failed and neglected to pay the dues of the applicant bank, hence, the Applicant Bank has been compelled to file this Application before this Tribunal.

3. Notices of this O.A. were issued to the defendants and certain defendants appeared through their respective counsels. Thereafter, vide order dated 04.04.2016 of the Tribunal, last opportunity was given to the defendants to file their WS but the defendants no. 1 to 3 failed to file the same, hence, their right to file the WS was closed vide order dated 23.05.2016. Moreover, due to non appearance, the case was directed to proceed ex parte qua defendants no. 1 to 3 vide order dated 23.05.2016.

Subsequently, IA No. 525/2016 was filed by defendants no.1 to 3 for setting aside ex parte order dated 23.05.2016 and to take on record the WS filed by defendants no.1 to 11. Record reveals that the said IA was allowed vide order dated 15.11.2016 subject to payment of cost of Rs.50,000/- payable to applicant bank on or before 08.12.2016. It was also directed that said cost shall be adjusted towards their dues and in default, their WS shall not be taken on record.

3.1 So far as, defendants no. 12 to 27 (performa defendants) are concerned, they are the performa defendants and no relief has been claimed by the applicant bank qua these defendants.

However, some of the performa defendants appeared through their officer or counsel before the Tribunal and the respective Written Statement(s) were filed on behalf of defendants no. 15 & 18 only but rest of the performa defendants did not choose to file any WS.

4. In their WS, Defendants no. 1 to 11 have raised following main objections :-

- (i) that it a matter of record that the defendants filed a reference before BIFR u/s 15 of Sick Industrial Companies (Special Provisions) Act,1985 ad the same was registered on 15.04.2015, however, this OA has been filed on 02.09.2015 without disclosing the fact that reference is pending before BIFR and obtained interim relief(s). Moreover, in this regard, IA No. 3/2016 was also filed u/s 22(1) of SICA, for suspension of proceedings of this OA;

- (ii) that the applicant bank wrongly and illegally declared / classified the assets of the defendant as NPA on 30.06.2014 and defendant no. 1 was not informed about declaring / classifying the credit facilities as NPA. In fact, on same date, there was a joint documentation in a consortium meeting and applicant bank was a party to said meeting;

- (iii) that the issue with regard to mortgaged properties is getting agitated in another OA being OA No.82/2016 which is filed by the consortium. The present OA is not maintainable, because no prior permission of filing a separate OA was sought from the Lead Bank of the consortium i.e. PNB and a separate OA on the same issue will result in two separate decrees which cannot practically be executed;

- (iv) that it is specifically denied that there was any exclusive sanction by the applicant bank to the tune of Rs. 106.46 crore to the defendant;

- (v) that the OA does not disclose any cause of action.

Hence, request is made to dismiss the OA with exemplary, punitive and compensatory costs and to reject the prayer clause of the OA.

5. Rejoinder to the WS of defendants no. 1 to 11 has also been filed by the applicant bank denying the allegations levelled against them and reiterating the averments made in the OA.

6. To prove their case, the Applicant Bank leads the evidence by filing affidavit of Sh. Diwakar Chaudhary, Chief Manager and Principal Officer of applicant bank.

6.1 Sh. Diwakar Chaudhary, Officer of Applicant Bank has placed reliance upon various documents viz.:-

- (i) Power of Attorney of applicant bank in favour of Sh. I.P. Yadav, the then AGM of the applicant bank at its Connaught Place Branch, [Ex. AW1/1(OSR)];

- (ii) Power of Attorney of applicant bank in favour of the deponent [Ex. AW1/2(OSR)];

- (iii) Letter of sanction dated 24.12.2009 (Ex. AW1/3);

- (iv) Letter dated 30.12.2019 of the defendant no. 1 company regarding confirmation of having availed credit facilities (Ex. AW1/4);

- (v) Board Resolutions issued by Corporate Guarantors authorizing to sign and execute the corporate guarantees (Ex. AW1/5to AW1/9);

- (vi) Demand Promissory Note dated 01.02.2010 for Rs. 42.0 crore (Ex. AW1/10);

- (vii) Demand Promissory Note dated 01.02.2010 for Rs. 18.0 crore (Ex. AW1/11);

- (viii) Composite Hypothecation deed (SD-20) dated 02.02.2010 for Rs. 60.0 crore (Ex. AW1/11);

- (ix) Letter of continuity (AD-09) dated 01.02.2010 for Rs. 42.0 crore (Ex. AW1/12);

- (x) Letter obtained from Directors (AD-10) dated 01.02.2010 (Ex. AW1/13);

- (xi) Packing Credit Agreement (SD-04) dated 02.02.2010 (Ex. AW1/14);

- (xii) Letter of Hypothecation of Bills (SD-17) dated 02.02.2010 (Ex. AW1/15);

- (xiii) Letter of Undertaking Not to Alienate Hypothecated Goods (AD-12) dated 02.02.2010 for a sum of Rs.42.0 crore (Ex. AW1/16);

- (xiv) Trust Receipt (AD-06) dated 01.02.2010 (Ex. AW1/17);

- (xv) Deed of guarantee in Bank form SD-01 dated 02.02.2010 to the tune of Rs. 60.0 crore executed by defendants no. 2 & 3 (Ex. AW1/18 & AW1/19 respectively);

- (xvi) Deed of Corporate guarantee in Bank form SD-01 dated 02.02.2010 to the tune of Rs. 60.0 crore executed by defendants no. 5 to 11 (Ex. AW1/20 to AW1/24 respectively);

- (xvii) Letter of Sanction dated 06.09.2012 for total amounting Rs. 80.40 crore of applicant bank (Ex. AW1/25);

- (xviii) Board Resolution of the defendant no .1 company held on 17.09.2012 (Ex. AW1/26);

- (xix) Composite Hypothecation deed (SD-20) dated 24.09.2012 for Rs. 80.40 crore (Ex. AW1/27);

- (xx) Packing Credit Agreement (SD-04) dated 24.09.2012 for Rs. 58.80 crore (Ex. AW1/28);

- (xxi) Letter of Undertaking Not to Alienate Hypothecated Goods (AD-12) dated 24.09.2012 for Rs. 58.80 crore (Ex. AW1/29);

- (xxii) Letter of Undertaking Not to Alienate Hypothecated Goods (AD-12) dated 24.09.2012 for Rs. 21.60 crore (Ex. AW1/30);

- (xxiii) Letter of continuity (AD-09) dated 24.09.2012 for Rs. 58.80 crore (Ex. AW1/31);

- (xxiv) Letter of continuity (AD-09) dated 24.09.2012 for Rs. 21.60 crore (Ex. AW1/32);

- (xxv) Demand Promissory Note dated 24.09.2012 for Rs. 58.80 crore with minimum of Rs. 12.00% (Ex. AW1/33);

- (xxvi) Demand Promissory Note dated 24.09.2012 for Rs. 21.60 crore (Ex. AW1/34);

- (xxvii) Letter obtained from Directors (AD-10) dated 24.09.2012 (Ex. AW1/35);

- (xxviii) Letter of Hypothecation of Bills (SD-17) dated 24.09.2012 (Ex. AW1/36);

- (xxix) Agreement on rate of interest dated 24.09.2012 (Ex. AW1/37);

- (xxx) Deed of guarantee in Bank form SD-01 dated 24.09.2012 to the tune of Rs. 80.40 crore executed by defendants no. 2 to 4 (Ex. AW1/38 to AW1/40 respectively);

- (xxxi) Deed of Corporate guarantee in Bank form SD-01 dated 24.09.2012 to the tune of Rs. 80.40 crore executed by defendants no. 5 to 11 (Ex. AW1/41 to AW1/46 respectively);

- (xxxii) Board Resolution of the defendant no. 1 dated 03.09.2013 (Ex. AW1/47);

- (xxxiii) Composite Hypothecation deed (SD-20) dated 06.09.2013 for Rs. 80.40 crore (Ex. AW1/48);

- (xxxiv) Packing Credit Agreement (SD-04) dated 06.09.2013 for Rs. 80.40 crore (Ex. AW1/49);

- (xxxv) Demand Promissory Note dated 06.09.2013 for Rs. 58.80 crore (Ex. AW1/50);

- (xxxvi) Hypothecation Agreement of Goods & Debts (SD-06) dated 06.09.2013 for Rs. 21.60 crore (Ex. AW1/51);

- (xxxvii) Demand Promissory Note dated 06.09.2013 for Rs. 21.60 crore (Ex. AW1/52);

- (xxxviii) Letter of Undertaking Not to Alienate Hypothecated Goods (AD-12) dated 06.09.2013 for Rs. 21.60 crore (Ex. AW1/53);

- (xxxix) Letter of continuity (AD-09) dated 06.09.2013 for Rs. 58.80 crore (Ex. AW1/54);

- (xl) Letter of continuity (AD-09) dated 06.09.2013 for Rs. 21.60 crore (Ex. AW1/55);

- (xli) Deed of guarantee in Bank form SD-01 dated 06.09.2013 to the tune of Rs. 80.40 crore executed by defendants no. 2 to 4 (Ex. AW1/56 to AW1/58 respectively);

- (xlii) Deed of Corporate guarantee in Bank form SD-01 dated 06.09.2013 to the tune of Rs. 80.40 crore executed by defendants no. 5 to 11 (Ex. AW1/59 to AW1/64 respectively);

- (xliii) Letter of Sanction dated 30.03.2014 for total amounting Rs. 106.46 crore of applicant bank (Ex. AW1/65);

- (xliv) Demand Promissory Note dated 30.03.2014 for Rs. 45.35 crore (Ex. AW1/66);

- (xlv) Demand Promissory Note dated 30.03.2014 for Rs. 41.83 crore (Ex. AW1/67);

- (xlvi) Demand Promissory Note dated 30.03.2014 for Rs. 19.28 crore (Ex. AW1/68);

- (xlvii) Composite Hypothecation deed (SD-20) dated 30.03.2014 for Rs. 106.46 crore (Ex. AW1/69);

- (xlviii) Hypothecation Agreement of Goods & Debts (SD-06) dated 30.03.2014 for Rs. 45.35 crore (Ex. AW1/70);

- (xlix) General Term Loan Agreement (SD-18) dated 30.03.2014 for Rs. 41.83 crore (Ex. AW1/71);

- (l) Term Loan Agreement (SD-19) dated 30.03.2014 for Rs. 41.83 crore (Ex. AW1/72);

- (li) General Term Loan Agreement (SD-18) dated 30.03.2014 for Rs. 19.28 crore (Ex. AW1/73);

- (lii) Term Loan Agreement (SD-19) dated 30.03.2014 for Rs. 19.28 crore (Ex. AW1/74);

- (liii) Letters of acceptance of terms and conditions of grants dated 30.03.2014 (Ex. AW1/75-colly);

- (liv) Letter of Undertaking Not to Alienate Hypothecated Goods (AD-12) dated 30.03.2014 for Rs. 45.35 crore (Ex. AW1/76);

- (lv) Letter of continuity (AD-09) dated 30.03.2014 for Rs. 45.35 crore (Ex. AW1/77);

- (lvi) Letter obtained from Directors (AD-10) dated 30.03.2014 (Ex. AW1/78);

- (lvii) Deed of guarantee in Bank form SD-01 dated 30.09.2014 to the tune of Rs. 106.46 crore executed by defendants no. 2 to 4 (Ex. AW1/79 to AW1/80 respectively);

- (lviii) Deed of Corporate guarantee in Bank form SD-01 dated 30.09.2014 to the tune of Rs. 106.46 crore executed by defendants no. 5 to 11 (Ex. AW1/81 to AW1/87 respectively);

- (liix) Master Restructuring Agreement dated 28.06.2014 (Ex. AW1/88);

- (lx) Letter dated 28.09.2007 issued by PNB for ceding pari passu charge over the mortgaged properties (Ex. AW1/89);

- (lxi) Documents with regard to creation of equitable mortgage of properties belonging to defendants no. 1, 2, 3, 5, 6, 7, 8 and 9 (Ex. AW1/90 & AW1/91-colly, AW1/92 & AW1/93-colly, AW1/94 & AW1/95-colly, AW1/96 & AW1/97-colly, AW1/98 & AW1/99-colly, AW1/100 & AW1/101-colly, AW1/102 & AW1/103-colly, AW1/103 & AW1/104-colly and AW1/105 & AW1/106-colly);

- (lxii) Legal recall notice dated 02.06.2015 sent to defendants no.1 to 11 by the applicant bank (Ex. AW1/107);

- (lxiii) Demand notice dated 03.07.2015 issued by applicant bank under Section 13(2) of the SARFAESI Act, 2002 to the defendant no. 1 to 11 (Ex. AW1/108);

- (lxiv) Statement of Account pertaining to Cash Credit Facility, WCTL and FITL (Ex. AW1/109 to AW1/111 respectively )to pay the dues of the bank but till date nothing has been repaid by the defendants.

7. So far as, evidence of defendants no. 1 to 11 is concerned, they have led evidence by way of affidavit of Sh. Ashok Kumar Bansal and have relied upon following documents :-

- (i) Board Resolution dated 13.08.2016 of defendant no. 1 authorizing Sh. Ashok Kumar Bansal to represent defendant no. 1 (Ex. DW1/1);

- (ii) Board Resolution dated 13.08.2016 of defendants no. 5 to 11 authorizing Sh. Ashok Kumar Bansal to represent defendants no. 5 to 11 (Ex. DW1/2);

- (iii) Proof of registration of reference before BIFR with regard to defendant company (Ex. DW1/3).

8. It is pertinent to mention here that during the pendency of this OA, IA no. 801/2024 was filed on behalf of applicant bank for seeking substitution of PNB and Union Bank of India in place of defendants no. 13 (OBC) & 19 (Andhra Bank) respectively which was allowed vide order dated 19.09.2024 of this Tribunal. Accordingly, names of defendants no.13 & 19 were substituted.

Similarly, one more application i.e. IA no. 1178/2024 was filed on behalf of applicant bank for seeking substitution of Canara Bank and Indian Bank in place of defendants no. 14 (Syndicate Bank) & 17 (Allahabad Bank) respectively which was also allowed vide order dated 12.11.2024 of this Tribunal. Accordingly, names of defendants no.14 & 17 were also substituted.

9. Moreover, during the pendency of this OA, it was informed by the Ld. counsel for the Applicant Banks that CIRP proceedings have been initiated qua defendant no. 1 company before Ld. NCLT, Delhi. It was also informed that personal insolvency proceedings have also been initiated qua defendants no. 2 & 3 before Ld. NCLT, Delhi.

10. Heard Ld. counsels for the parties and perused the entire record.

10.1 Since, Defendants no.1 is under CIRP before Ld. NCLT and personal insolvency proceedings are pending qua defendants no. 2 & 3. Hence, no final order can be passed qua these defendants, at this stage.

10.2 In these circumstances, now there is no need to deal with the WS of defendants no. 1 to 3, however, the objections raised in the common WS on behalf of defendants no. 4 to 11 is being dealt by this Tribunal in following paras:-

- (i) Defendants have raised an objection that it is a matter of record that the defendants filed a reference before BIFR u/s 15 of Sick Industrial Companies (Special Provisions) Act, 1985 and the same was registered on 15.04.2015, however, this OA has been filed on 02.09.2015 without disclosing the fact that reference is pending before BIFR and obtained interim relief(s). Moreover, in this regard, IA No. 3/2016 was also filed u/s 22(1) of SICA, for suspension of proceedings of this OA.

It is admitted position that the Sick Industrial Companies (Special Provisions) Repeal Act, 2003, was enacted to repeal the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The repeal came into effect on December 1, 2016, and resulted in the dissolution of the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). Proceedings pending before these bodies were abated.

Even otherwise, defendants no. 1 to 3 are already before Ld. NCLT, Delhi and no order is going to be passed qua these defendants.

In the light of above, this plea of defendants stands rejected.

(ii) Next objection raised by the defendants is that the applicant bank wrongly and illegally declared / classified the assets of the defendant as NPA on 30.06.2014 and defendant no. 1 was not informed about declaring / classifying the credit facilities as NPA. In fact, on same date, there was a joint documentation in a consortium meeting and applicant bank was a party to said meeting.

It is admitted position that the applicant bank classified the accounts of defendant no. 1 as NPA on 30.06.2014 and now defendants are raising the objection that applicant bank classified the account as NPA wrongly and illegally.

I do not find any illegality or irregularity in declaration of account as NPA by applicant bank. In fact, the account of the defendant company has rightly been classified as NPA following RBI Rules and Guidelines. Moreover, defendants have failed to

show how the NPA was wrong nor they have filed their own statement of accounts / document to this effect. So far as, objection of the defendants to the effect that no notice or caution is issued by the bank before classifying the Account as 'NPA', there is no pre-requirement to caution the borrower before classification of account as NPA as the account is declared NPA as per RBI Rules and Guidelines.

Even otherwise, this OA has been filed for recovery of the dues from the defendants whereas NPA concept is adjudicated in SARFAESI actions taken by the banks / FIs.

In these circumstances, this objection of defendants is hereby rejected.

- (iii) Next objection raised by the defendants is that the issue with regard to mortgaged properties is getting agitated in another OA being OA No.82/2016 which is filed by the consortium. The present OA is not maintainable, because no prior permission of filing a separate OA was sought from the Lead Bank of the consortium i.e. PNB and a separate OA on the same issue will result in two separate decrees which cannot practically be executed.

It is matter of record that OA No. 82/2016 (now TA No. 239/2022) has been filed by consortium members wherein lead bank is PNB and applicant bank of this OA i.e. Union Bank of India has been made party as perform defendant. But no relief has been claimed for present applicant bank in the said OA filed by PNB and other consortium members.

Record reveals that this OA has been filed by Union Bank of India for recovery of its dues from defendants no. 1 to 11 with regard to facilities granted by it to the said defendants either by individually or under consortium. But it is admitted position that PNB has not claimed any amount due to present applicant in the OA filed by it i.e. OA No. 82/2016 (now TA No. 239/2022).

Though, charge on the secured assets has been created by applicant bank as well as members banks of Consortium of PNB but this OA has been filed separately by Union Bank of India and applicant bank is not seeking any relief qua member banks of consortium.

In the light of above, this plea of defendants is also not going to absolve the defendants from their liability and same stands rejected.

- (iv) Defendants have also raised an objection that it is specifically denied that there was any exclusive sanction by the applicant bank to the tune of Rs. 106.46 crore to the defendant.

Record reveals that applicant bank has duly corroborated the averments made in the OA on the basis of security / loan documents executed by the defendants no. 1 to 11. Hence, this plea of defendants, being devoid of any merit, is hereby rejected.

- (v) Next objection of defendants is that the OA does not disclose any cause of action.

Since, the applicant bank has duly corroborated the averments made in the OA on the basis of security / loan documents executed by the defendants no. 1 to 11 and defendants have failed to prove otherwise. Hence, this plea of defendants, being devoid of any merit, is hereby rejected.

Apart from the objections raised in the WS, Ld. counsel for defendants no.2 to 11 had also raised some legal issues and also filed the written submissions as well. Hence, legal issues raised by defendants no. 2 to 11 during the course of arguments shall also be dealt with by this Tribunal with regard to defendants no. 4 to 11 only (as defendants no. 2 & 3 are before Ld. NCLT) in following paras :-

- (i) Defendants no. 4 to 11 have raised an objection that the proceedings initiated by the applicant bank qua these defendants are not maintainable in the light of moratorium imposed under Section 96 of IBC, 2016. It is stated that the resolution plan qua defendant no. 1 stands approved by CoC and said approval has also been accepted by Ld. NCLT vide order dated 28.02.2024. Moreover, as per IA No.1441/2023 filed by Ld. Resolution Professional, in terms of the Resolution Plan floated, the guarantees given by the defendants stood extinguished and annulled [copy of order dated 28.02.2024 passed by Ld. NCLT has been annexed as Ex. A-1].

This Tribunal is of the view that though it is matter of record that defendant no. 1 company is under CIRP process, however, other defendants no. 2 to 11 being personal / corporate guarantors are liable to pay the dues of the banks being guarantors of the facilities availed by defendant no. 1. Therefore, this objection is baseless, futile and untenable, accordingly, same stands dismissed.

(ii) Next objection of defendants no. 4 to 11 is that institution of petition under Section 7 of IBC against defendants no. 5 & 8 before Ld. NCLT, Delhi, which if admitted would ultimately not be proceeded against in the light of Section 14 of IBC, 2016 (copies of orders passed by Ld. NCLT have been annexed as Ex. A-4 & A-5).

I have gone through the orders passed by Ld. NCLT, Delhi which shows that notice on the said applications have been issued but same have not been admitted till date. Therefore, this objection is baseless, futile and untenable, accordingly, same stands dismissed.

(iii) Defendants have also raised an objection that the applicant bank has arbitrarily and illegally classified the accounts of the defendants as NPA, in blatant violation of RBI guidelines and settled judicial precedents.

I have gone through the entire record. It is revealed from the record that since the defendant borrower company failed to maintain financial discipline, hence, the applicant banks classified the account of the defaulting borrowers as a NPA in accordance with the directions / guidelines issued by the RBI. I do not find any illegality or irregularity in declaration of account as NPA by the applicant banks. In fact, the defendants have not denied the availment of loan facilities nor denied the execution of security documents as well. Thus, this Tribunal is of the view that the account of the borrower company has rightly been classified as NPA following RBI Rules and Guidelines. In these circumstances, this objection of Ld. counsel for defendants no. 4 to 11 also stands rejected.

(iv) Ld. counsel for Defendants has also argued that continuation of the present proceedings is barred by Section 238 of IBC, which provides the provisions of the Code shall overriding effect over all other laws, including of RDB Act and the SARFAESI Act 2002.

Since, defendants no. 1 to 3 are already before Ld. NCLT, Delhi, hence, no final order is going to be passed qua these defendants. So far as, other defendants are concerned, they are not before Ld. NCLT, hence, appropriate orders shall be passed qua them, in accordance with law.

(v) Next objection of defendants is that defendants no. 2 & 3 are the controlling persons of defendants no. 5 to 11. In particular, defendant no. 2, Mr. Ashok Kumar Bansal, is the Director and Authorized Representative of multiple Defendant entities, and he also acts as the Karta of Defendant no. 4 (HUF). Given their financial and operational control over the Defendant entities, the moratorium applicable to the directors must necessarily extend to the corporate defendants.

It is matter of record that defendants no. 2 & 3 are under personal insolvency but this fact cannot give benefit to the companies on the ground that these defendants were directors of said companies as the entity of companies are different from the directors. Accordingly, this plea of defendants is also hereby rejected.

(vi) Defendants have also raised an objection that the jurisdiction of the DRT is out rightly barred in cases where insolvency proceedings are initiated under the IBC. Once, insolvency proceedings are initiated before the NCLT, all other parallel proceedings before any other Tribunal, including the DRT, must be halted in accordance with the statutory moratorium.

In the light of discussion made in above paras, this objection also stands rejected.

10.3 On the other hand, the witnesses of applicant bank(s) have fully corroborated the averments made in the OA. Even otherwise the whole case of the applicant bank(s) is based on the documents and the respective witnesses have duly proved all these documents. The evidence filed by the applicant bank(s) gone unrebutted 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 Applicant is entitled to recover the entire amount, as claimed in the OA from the defendants along with pendentelite interest i.e. @10% p.a. and costs as agreed between the parties. So far as, prayer for granting Additional interest @ 2% is concerned, same is hereby declined.

10.4 In this OA, applicant bank has prayed to issue recovery certificate against defendants no. 1 to 11 wherein the defendant 1 is principal borrower and defendants no. 2 & 3 are personal guarantors; defendant no. 4 is HUF and defendants no. 5 to 11 have been impleaded in the capacity of corporate guarantors.

10.5 Since CIRP proceedings have already been initiated qua Defendant no. 1 before Ld. NCLT, Delhi, hence, no final order can be passed by this Tribunal qua defendant no. 1 at this stage.

However, it is directed that applicant bank(s) shall be at liberty to revive the OA qua defendant no. 1 in case NCLT / CIRP proceedings are quashed / withdrawn in future, in accordance with law.

It is also directed that in case applicant Bank(s) receives any amount from CIRP proceedings, it shall give due adjustment of the same in the recovery proceedings.

10.6 Since defendants no. 2 & 3 are also before Ld. NCLT, Delhi, hence, no order qua defendants no. 2 & 3 also can be passed against said defendant at this stage.

However, it is directed that applicant banks shall be at liberty to revive the OA qua defendants no. 2 & 3 in case proceedings before Ld. NCLT are quashed / withdrawn in future, in accordance with law.

It is directed that in case Applicant Banks receive any amount from the proceedings pending before Ld. NCLT, they shall give due adjustment of the same in the recovery proceedings.

10.7 Consequently, TA No. 389/2022 is liable to be allowed in favour of applicant bank(s) against defendants no. 4 to 11 (being HUF and personal / corporate guarantors to the Borrower company i.e. defendant no. 1), who are liable to pay the respective dues of the applicant bank(s) along with costs and pendentelite & future interest @10% p.a., from the date of filing of present OA, till the date of payment in full.

ORDER

(i) TA No. 389/2022 stands allowed and the defendant no. 4 to 11 are directed to pay to the applicant bank, within 30 days, a sum of Rs. 105,33,60,421.84 (Rupees One Hundred Five Crore Thirty Three Lakh Sixty Thousand Four Hundred Twenty One and Paise Eighty Four only) along with pendentelite and future interest @10% p.a. from the date of filing of this OA till realization of the entire dues of the Applicant Bank(s) failing which, the aforesaid amount shall be recovered from the sale of secured assets / mortgaged properties / hypothecated assets / stocks etc., if any, belonging to the defendants no. 4 to 11 only.

In case of shortfall, same shall be recovered from the movable and immovable assets of defendants no. 4 to 11 only.

(ii) Since CIRP proceedings have already been initiated qua Defendant no. 1 before Ld. NCLT, Delhi, hence, no final order can be passed by this Tribunal qua defendant no. 1 at this stage.

However, it is directed that applicant bank(s) shall be at liberty to revive the OA qua defendant no. 1 in case NCLT / CIRP proceedings are quashed / withdrawn in future, in accordance with law.

It is also directed that in case applicant Bank(s) receives any amount from CIRP

proceedings, it shall give due adjustment of the same in the recovery proceedings.

- (iii) Since defendants no. 2 & 3 are also before Ld. NCLT, Delhi, hence, no order qua defendants no. 2 & 3 also can be passed against said defendant at this stage.

However, it is directed that applicant banks shall be at liberty to revive the OA qua defendants no. 2 & 3 in case proceedings before Ld. NCLT are quashed / withdrawn in future, in accordance with law.

It is also directed that in case Applicant Banks receive any amount from the proceedings pending before Ld. NCLT, they shall give due adjustment of the same in the recovery proceedings.

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

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

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

TA-389/2022

(vii) Parties are directed to appear before the Recovery Officer-II, DRT-III, Delhi on 17.12.2025.

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

File be closed and consigned to records.

17.10.2025 (SHIV KUMAR - I) PRESIDING OFFICER, DRT-III, DELHI

(Pronounced in open court) Dated: 17.10.2025

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