PUNJAB NATIONAL BANK (ORIENTAL BANK OF COMMERCE) vs M/S JAI MAA VARAHI TRACTORS, on 15 February 2024

**JUDGMENT**

1- The Applicant bank has made this application u/s 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, now Recovery of Debts and Bankruptcy Act, 1993 (here-in-after referred to as Act) on 08.09.2015, before DRT, Lucknow, against the defendants to recover its debts from defendants of Rs. 23,15,835/- alongwith pendentelite and future interest @ 13.25% +2% penal interest per annum with monthly rest from 01.09.2015 with costs till realization. Pursuant to Gazette Notification No. 454(E), dated 15.02.2017 of the Ministry of Finance, Department of Financial Services, New Delhi, this OA bearing No. 729/2015 was transferred from DRT, Lucknow to this Tribunal.

2- The application has been duly registered and numbered as above.

3- The brief facts of the case of the applicant bank as stated in the application are as under- and one of its Regional Office at Eldeco Building, Vibhuti Khand, R.M.L. Hospital, Gomti Nagar, Lucknow, Uttar Pradesh – 226010 amongst other places and one of its Branch Office run in locally in the City of Gonda, U.P. which is known as Gonda Branch situated at Hotel Gonard, Gonda, U.P. through its Constituted Attorney Mr. Akhilesh Kumar.

The facts of the case as contained in the application are that in the year 2009, the defendant No. 2 & 3 approached the Applicant Bank and informed the Applicant Bank about their business activities in the name and style of M/s Jai Maa Varahi Tractors (defendant No. 1). The defendant No. 2 (sole Proprietor of defendant No. 1) & defendant No. 3 approached the Applicant Bank and requested for financial assistance under the Housing Loan Scheme of the Bank viz. Housing Loan Credit Facility in the shape of Term Loan amounting to Rs. 9.00 lacs in the joint name of defendant No. 2 & 3. On the request of the defendant No. 2 & 3, the Applicant Bank sanctioned and granted the Housing Loan Credit Facility under Housing Loan Scheme of the Applicant Bank, amounting to Rs. 9.00 lacs vide its Sanction Letter dated 15.12.2009. All the terms and conditions were accepted by defendants.

In order to secure the due repayment of the Applicant Bank in respect of aforesaid credit facility of Rs. 9.00 lacs, the defendants signed, executed and delivered several security documents on 19.12.2009 in favour of the Applicant Bank.

In order to further secure the due repayment of the Applicant Bank in respect of aforesaid credit facility of Rs. 9.00 lacs, the defendant No. 3 namely Mrs. Geeta Devi W/o Mr. Bindeshwari Prasad Tiwari created equitable mortgage by deposit of its original registered title deeds in favour of the Applicant Bank in respect of her immovable property i.e. *Property bearing Part of Gata No. 1210 & 1211, Janki Nagar Gramin, Gonda, U.P., measuring 4312 Sq. Ft. standing in the name of Mrs. Geeta Devi alias Nayan Kumari w/o Bindeshwari Prasad Tiwari.*

In the year 2010, the defendant No. 2 who is the sole proprietor of defendant No. 1 again approached the Applicant Bank & requested for an additional financial assistance of Rs. 8.00 lacs in the shape of Cash Credit Facility in the name of defendant No. 1, in addition to the existing Housing Loan Credit Facility of Rs. 9.00 lacs. On the request of the defendants, the Applicant Bank sanctioned and granted the additional credit financial assistance in the shape of Cash Credit, amounting to Rs. 8.00 lacs vide its Sanction Letter dated 24.04.2010. All the terms & conditions of sanction letter were accepted by the defendants.

In order to secure the due repayment of the Applicant Bank in respect of aforesaid credit facility of Rs. 8.00 lacs, the defendants signed, executed and delivered several security documents on 24.04.2010 in favour of the Applicant Bank.

In order to further secure the due repayment of the Applicant Bank in respect of aforesaid credit facility of Rs. 8.00 lacs, the defendant No. 3 namely Mrs. Geeta Devi W/o Mr. Bindeshwari Prasad Tiwari created extension of equitable mortgage of her immovable property already mortgaged with the Bank in the Housing Loan Facility availed by them (defendant No. 2 & 3) in favour of the Applicant Bank on 24.04.2010.

In the month of January - 2011, the defendant No. 1 through its sole proprietor defendant No. 2 again approached the Applicant Bank & requested for an additional Cash Credit Facility of Rs. 14.00 lacs in the shape of Cash Credit Facility in the name of defendant No. 1, in addition to the existing Cash Credit Facility of Rs. 8.00 lacs, total aggregating to Rs. 22.00 lacs. On the request of the defendants, the Applicant Bank sanctioned and granted the additional cash credit facility in the shape of Cash Credit, amounting to Rs. 14.00 lacs vide its Sanction Letter dated 11.01.2011. All the terms & conditions of sanction letter were accepted by the defendants.

In order to secure the due repayment of the Applicant Bank in respect of aforesaid credit facility of Rs. 14.00 lacs over and above existing Cash Credit Facility of Rs. 8.00 lacs, total amounting to Rs. 22.00 lacs, the defendants signed, executed and delivered several security documents on 11.01.2011 in favour of the Applicant Bank.

In order to further secure the due repayment of the Applicant Bank in respect of aforesaid credit facility of Rs. 22.00 lacs, the defendant No. 3 namely Mrs. Geeta Devi W/o Mr. Bindeshwari Prasad Tiwari created extension of equitable mortgage of her immovable property already mortgaged with the Bank in the Housing Loan Facility availed by them (defendant No. 2 & 3) in favour of the Applicant Bank on 11.01.2011.

Apart from above, the defendant No. 2 namely Mr. Bindeshwari Prasad Tiwari S/o Hari Prasad Tiwari created equitable mortgage by depositing their original title deeds in respect of his immovable properties details herein under:-

1. 1. *Property bearing Part of Gata No. 1209, Village – Janki nagar Gramin, Gonda, U.P., measuring 1306 Sq. Ft. standing in the name of Mr. Bindeshwari Prasad Tiwari, on 11.01.2011 in favour of the Applicant Bank.*

2. 2. *Property bearing Part of Gata No. 14, Village – Imliya Gurudayal, Gonda, U.P., measuring $1/3^{rd}$ of 0.2270 Hectare standing in the name of Mr. Bindeshwari Prasad Tiwari.*

Further, the defendants have also executed & delivered a Balance & Security Confirmation Letter dated 20.09.2012 in favour of the Applicant Bank.

During the course of recovery proceedings initiated by the Applicant Bank, the defendants have moved before the Hon'ble High Court of Judicature at Allahabad, Lucknow Bench Lucknow vide Writ Petition No. 9724/2012 and 8386/2013 challenging the SARFAESI proceedings of the Applicant Bank but the defendants themselves did not complied with the Order passed by the Hon'ble High Court of Judicature at Allahabad, Lucknow Bench, Lucknow. Further as per the statement of the defendants the Writ Petition No. 2151/2012 in pending before the Hon'ble High Court at Lucknow for disposal but the Applicant Bank has no knowledge of this Writ Petition.

The defendants have also filed two Civil Suits on false and fabricated grounds against the Applicant Bank before the Hon'ble Civil Judge (S.D.), Gonda bearing No(s). 1057/2013 and 375/2014 to hinder the recovery proceedings of the Applicant Bank but till date no relief has been granted to the defendants. Further, the defendants have also tried to implicate the Bank Officers of the Applicant Bank into criminal proceedings by lodging series of Complaints before the Competent Authorities but all in vain.

Further, the defendants have moved a time barred Securitization Application before this Hon'ble DRT at Lucknow bearing S.A. No. 109/2015 by which they have challenged the SARFAESI Action initiated against them but it is appreciating that the defendants have not disputed their loan liabilities thus acknowledged their loan liability with the Applicant Bank.

3- The defendants availed the aforesaid facilities but failed to repay the dues of the bank as per agreed terms, they failed to adhere the financial discipline of the applicant bank, the account of the defendants became irregular and sticky and were declared NPA on 31.12.2011. The applicant Bank sent Legal/ demand notice on 29.03.2012 and Possession Notice on 31.10.2012 to the defendants but despite receipt of the same, the defendants failed to liquidate bank's dues. All these acts and conduct on the part of the defendants are contrary to the terms and conditions of the documents signed and executed by defendant on behalf of defendant no. 1. Accordingly the applicant bank has moved this O.A. to recover public money.

The total outstanding due in the account comes to Rs. 23,15,835/- inclusive of interests which has been claimed by means of present O.A.

The interest /compound interest has been charged at such rates, and capitalized at such periodical rests as are permitted by and do not run counter to the directives of Reserve Bank of India.

Since, the defendants have failed and neglected in spite of several reminders to make payment of the dues recoverable to bank, hence this application has been filed by the bank.

4- U/s 19 (4) of the Act & Rule 11 of the DRT [Procedure] Rules, 1993, copies of application & paper book were sent by this Tribunal to the defendants by registered/speed post on 23.05.2023, and summons/notices issued requiring the defendants to show-cause within 30 days of the service of summons/notices as to why relief prayed for, should not be granted.

On perusal of the case records, it is seen that on 23.05.2023, summons/notices were sent to the defendants, but the defendants have not appeared, hence, this Tribunal has ordered to publish the notice in newspaper and subsequently, substituted service by publication of notice by way of advertisement in newspaper was also made against the defendants on 12.08.2023 in "Amar Ujala", newspaper.

Despite the registered summons/notices and publication of notice in newspaper, the defendants have not appeared before this Tribunal to contest the case. The sufficient time has been given to the defendants to defend their case, but they failed to appear and to file WS, hence, the Tribunal has passed an order to proceed exparte against the defendants on 12.02.2024.

5- To prove its case, the applicant Bank has referred attested copies of various documents before this Tribunal on 08.09.2015. The applicant bank has also given evidence on affidavit by way of affidavit of Shri Akhilesh Kumar, Principal Officer & Senior Manager of the applicant bank. The details of documents are as follows. :- <table border="1"> <thead> <tr> <th>Sl.No</th> <th>Description of Documents(Attested copies)</th> <th>Date of Execution</th> <th>Amount [In lacs]</th> <th>Signature of executants</th> <th>Ex./ Ann. No.</th> </tr> </thead> <tbody> <tr> <td>1</td> <td>Copy of the Power of Attorney</td> <td>18.07.2006</td> <td>--</td> <td>Bank</td> <td>A- 1</td> </tr> <tr> <td>2</td> <td>Copy of the Firm Registration</td> <td>--</td> <td>--</td> <td>--</td> <td>A- 2</td> </tr> <tr> <td>3</td> <td>Copy of the Sanction Letter</td> <td>15.12.2009</td> <td>9.00</td> <td>Def. 2 &amp; 3</td> <td>A- 3</td> </tr> <tr> <td>4</td> <td>Copy of the Common Agreement</td> <td>19.12.2009</td> <td>9.00</td> <td>Def. 2 &amp; 3</td> <td>A- 4</td> </tr> <tr> <td>5</td> <td>Copy of the Agreement of Term Loan</td> <td>19.12.2009</td> <td>9.00</td> <td>Def. 2 &amp; 3</td> <td>A- 5</td> </tr> <tr> <td>6</td> <td>Copy of the Registered Sale Deed</td> <td>27.12.2009</td> <td>9.00</td> <td>Def. 3</td> <td>A- 6</td> </tr> <tr> <td>7</td> <td>Copy of the Memorandum for Creation of Equitable Mortgage</td> <td>19.12.2009</td> <td>9.00</td> <td>Def. 3</td> <td>A- 7</td> </tr> <tr> <td>8</td> <td>Copy of the Sanction Letter</td> <td>24.04.2010</td> <td>8.00</td> <td>Def. 1 &amp; 2</td> <td>A- 8</td> </tr> <tr> <td>9</td> <td>Copy of the Letter of Sole Proprietorship (Loan Doc-21)</td> <td>24.04.2010</td> <td>8.00</td> <td>Def. 2</td> <td>A- 9</td> </tr> <tr> <td>10</td> <td>Copy of the Common Agreement (Doc-38)</td> <td>24.04.2010</td> <td>8.00</td> <td>Def. 1 &amp; 2</td> <td>A- 10</td> </tr> <tr> <td>11</td> <td>Copy of the Agreement of Overdraft (Loan Doc-04)</td> <td>24.04.2010</td> <td>8.00</td> <td>Def. 1 &amp; 2</td> <td>A- 11</td> </tr> <tr> <td>12</td> <td>Copy of the Agreement of Hypothecation of Assets (Loan Doc-01)</td> <td>24.04.2010</td> <td>8.00</td> <td>Def. 1 &amp; 2</td> <td>A- 12</td> </tr> <tr> <td>13</td> <td>Copy of the Agreement of Guarantee</td> <td>24.04.2010</td> <td>8.00</td> <td>Def. 3</td> <td>A-13</td> </tr> <tr> <td>14</td> <td>Copy of the Memorandum for Creation of Equitable Mortgage</td> <td>24.04.2010</td> <td>8.00</td> <td>Def. 3</td> <td>A-14</td> </tr> <tr> <td>15</td> <td>Copy of the Sanction</td></tr></tbody></table>

<table border="1"> <thead> <tr> <th></th> <th>Guarantee</th> <th></th> <th></th> <th></th> <th></th> </tr> </thead> <tbody> <tr> <td>20</td> <td>Copies of the Registered Sale Deeds and Memorandum for creation of Equitable Mortgage/Extension of Equitable Mortgage</td> <td>11.01.2011</td> <td>22.00</td> <td>Def. 2 &amp; 3</td> <td>A-20, 21 &amp; 22</td> </tr> <tr> <td>21</td> <td>Copy of the Balance &amp; Security Confirmation Letter</td> <td>20.09.2012</td> <td>24.66</td> <td>Def. 2 &amp; 3</td> <td>A-23</td> </tr> <tr> <td>22</td> <td>Copy of the Orders Passed by the Hon'ble High Court of Judicature at Allahabad, Lucknow Bench, Lucknow Writ Petition No. 9724/2012 &amp; Writ Petition No. 8386/2012</td> <td>--</td> <td>--</td> <td>--</td> <td>A-24 &amp; 25</td> </tr> <tr> <td>23</td> <td>Copy of the Original Bankers Certificate</td> <td>--</td> <td>--</td> <td>--</td> <td>A-26</td> </tr> <tr> <td>24</td> <td>Copy of the Statement of Loan Accounts.</td> <td>--</td> <td>--</td> <td>--</td> <td>A-27</td> </tr> </tbody> </table>

6- Opportunity of hearing has been fully given to both the parties, but despite several opportunities given to defendants, the defendants have not appeared to contest the case, hence, the exparte arguments of learned counsel for applicant bank were heard. Perused the case record and considered.

Ld. counsel of applicant bank submitted that the defendants have taken the loan and utilized the same and also executed the various loan documents to secure the loan. Further submitted that the claim of the bank has been proved by documentary and oral evidence. Ld. Counsel for the applicant bank further submitted that the defendants have not deposited any amount, after filing of the OA.

It is further submitted by ld. Counsel of applicant bank that there is no any stay granted by any Higher Court, in respect of the proceedings of the present OA and requested to issue recovery certificate, as claimed for, in OA.

7- It has been established that defendants are living and carrying on their business in the state of Uttar Pradesh. Cause of action also arose in the State of Uttar Pradesh. The said claim on the date of filing of application exceeded Rs.20 lacs. The applicant bank is functioning within jurisdiction of this Tribunal. Therefore, this Tribunal has territorial as well as pecuniary jurisdiction to adjudicate upon the present application.

8- On the issue of Limitation, to prove it, the applicant bank has submitted that the applicant bank has declared the account as NPA on 31.12.2011, whereas the present application has been filed on 08.09.2015. Even, it is counted for the purpose of Limitation, then it is established that the applicant bank has filed the case within the limitation period from the date of declaring the account as NPA. As such, it is established that present application has been filed well within the period of limitation.

9- In the affidavit of Shri Akhilesh Kumar, Principal Officer & Senior Manager of the applicant bank, has stated that he is well acquainted with the facts of the case and has on verification of record, sworn in the affidavit in support of contents of application and the documents as evidence and established on oath the pleadings and documents of the applicant bank as stated above.

The documents as stated above reveal that the defendants have applied for loan and the bank had sanctioned the loan and to secure the loan and for repayment of loan amount with interests etc., the defendants have executed various loan documents, which strength the case of the applicant bank.

The applicant bank has also furnished statement of account as above, which is not only admissible but shall be taken as correct statement of account, more so since the entries in the statement of account has not been challenged.

10- Since, the defendants were proceeded exparte, all contentions raised and documents produced by plaintiff remained unrebuted and the tribunal may act upon the affidavit of the applicant as per law. Defendants have neither denied the utilization of funds advanced by applicant bank nor have pointed out any specific error and discrepancy in the Statement of Account, which is kept in due course of business, evidence on affidavit, which has supported the claim of the applicant bank, established to have fully correct and believable. Provisions contained in Section 4 of the Banker's Books Evidence Act, 1891 apply to certified copies of entries in banker's book furnished along with the application filed under section 19[1] of the Act. Hence, the entries in the Statement of Account are also proved.

11- On consideration of the arguments and on perusal of the application, documents and affidavit, it is proved that the applicant bank has granted the loan facilities, documents were executed by the defendants and facilities were availed by the defendants as stated in the application.

12- Now, whether interest has been charged as per agreement and as per R.B.I. Guidelines?

13- The applicant bank has sought for recovery of a sum of Rs. 23,15,835/- with cost and further interest @ 13.25% +2% penal interest per annum with monthly rest from 01.09.2015 till realization.

14- Learned Advocate appearing for applicant bank submits that the applicant bank has charged interest in terms of the agreements and that interest has been charged at such rates, and capitalized at such periodical rests as are permitted by and do not run counter to the directives of Reserve Bank of India.

15- On consideration of the arguments and on perusal of the pleadings, documents and affidavit, it is proved that the applicant has charged interest against defendants in terms of documents and as per directives of R B I, but keeping the facts and circumstances of the case in mind, the defendants deserve some leniency in the rate of interest being Housing Loan.

16- None of the defendants appeared before the Tribunal to contest the claim made by the applicant, therefore, it necessarily goes to establish that the claim made by the applicant bank is genuine and true. It is manifest that the defendants have not disputed the claim, therefore, the claim referred to the Tribunal is recoverable till full and final realization of the claim.

17- In Indian Bank Vs. Blue Jagers Estates Limited and others [2010] 8 SCC 129, the Hon'ble Supreme Court of India has observed as under- "The Court cannot lose sight of the fact that the bank is a trustee of public fund. It cannot compromise the public interest for benefiting private individuals. Those who take loan and avail financial facilities from the bank are duty bound to repay the amount strictly in accordance with the terms of the contract. Any lapse in such matters has to be viewed seriously and the bank is not only entitled but duty bound to recover the amount by adopting all legally permissible methods. Parliament enacted the act because it was found that legal mechanism available till then was wholly insufficient for recovery of the outstanding dues of the banks and Financial Institutions."

18- Facts of the case, in my view, are well proved by evidence of the applicant bank. The applicant bank is entitled to receive its debts from defendants, jointly and severally Rs. 23,15,835/- alongwith pendentelite and future interest @8.50% Simple per annum from 01.09.2015 till realization. So the final order may be passed accordingly, to meet the ends of justice.

ORDER

In the result, the application of the applicant bank is, allowed and debt is determined with costs against the defendants and it is, hereby, ordered that the applicant bank is entitled to receive its debts from defendants, jointly and severally, it's debts with interest, amounting to Rs. 23,15,835/- alongwith pendentelite and future interest @8.50% Simple per annum from 01.09.2015 till realization of the entire sum due and recoverable with costs.

In case of failure to repay the aforementioned adjudicated amount within 30 days, same shall be recovered from the sale of the *hypothecated assets /mortgaged properties of the Defendants in execution proceedings*. *The amount, if any, already recovered by sale of any hypothecated assets /mortgage properties or otherwise shall be adjusted towards the debt and only the balance amount shall be recoverable. If the dues of Applicant Bank still remain unsatisfied, the same shall be recovered by attachment and sale of the personal movable and immovable assets of the Defendants jointly or severally. The cost of litigation be also borne by the Defendants.*

*The Defendants are hereby restrained by means of injunction from depleting, transferring, encumbering, alienating, selling or otherwise dealing with hypothecated assets/ mortgage properties or their other immovable/movable properties/estates without first paying the above claim of Applicant Bank/Certificate Holder.*

*In case, any of the Defendants expire, the legal representatives shall be liable to pay in proportion to the inheritance.*

Let a certificate of recovery be drawn up forthwith and put up for signatures in terms of provisions contained in Section 19(22) of the Act to be issued, on the basis of the order of the Tribunal to the Recovery

Officer. The Recovery Officer shall realize the amount as per the certificate in the manner and mode prescribed under the Act from the defendants.

Pending I. As. if any, stands disposed off.

Parties are directed to appear before the Recovery Officer, DRT, Allahabad on 22.04.2024. The order be communicated accordingly.

Judgment signed, sealed, dated and pronounced in the open court on this 15^th Day of February, 2024.

Dictated & Corrected by me.

[R. M. Kushawaha] Presiding Officer Debts Recovery Tribunal, Allahabad

[R. M. Kushawaha] Presiding Officer Debts Recovery Tribunal, Allahabad

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