CENTRAL BANK OF INDIA vs M/S DILIP GARMENTS, on 20 March 2024

1. 1. **M/s Dilip Garments**, through its proprietor Shri Dilip Kumar Misra, Village Maurapara, PO Khewar, District Ambedkar Nagar, U.P.

2. 2. **Shri Dilip Kumar Misra**, S/o Shri Chandra Bhan Misra, Village Maurapara, PO Khewar, District Ambedkar Nagar, U.P.

3. 3. **Shri Chandra Bhan Misra**, S/o Shri Mathura, Village Maurapara, PO Khewar, District Ambedkar Nagar, U.P.

4. 4. **Shri Vijai Bahadur**, S/o Shri Hira Lal, Village Maurapara, PO Khewar, District Ambedkar Nagar, U.P.

...Defendants.

Present:

**For the Applicant**

: Ms. Arpita Tarmali, Advocate BH of Shri Sunil Kumar Srivastava, Advocate **For the Defendants**

: None

**Dated: 20.03.2024****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 04.11.2016, against the defendants to recover its debts from defendants of Rs. 16,68,207/- upto 03.11.2016 alongwith pendentelite and future interest @ 14.25% per annum with monthly rest from 04.11.2016 with costs till realization.

Subsequently, the case record of the present Original Application No. 1326 of 2016 has been transferred to this Tribunal in view of Notification of Government of India, Ministry of Finance dated 15.02.2017 thus the case has been re-numbered as TA 64 of 2019.

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- The applicant bank is a body corporate constituted under the Provision of Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970, having its head Office at Chander Mukhi, Nariman Point, Mumbai – 400021, Carried on its business through

The brief facts of the case as gathered from the Original Application are that the defendant no.1 is a proprietorship firm of which defendant no.2 is the proprietor and borrower of the Defendant No. 1 firm and Defendant No. 3 & 4 stood as guarantors for the said credit facilities. The defendant No. 1 through its proprietor Defendant No. 2 approached the applicant bank for grant of financial facility to augment the business. The applicant bank considered the request of the defendant nos.1 & 2 and sanctioned Cash Credit Limit of Rs. 6.50 lacs and Term Loan of Rs. 2.50 Lacs aggregating Rs. 9.00 Lacs together with interest through Sanction letter.

Upon sanction of the said credit facilities, the defendant no.2 for self and on behalf of the defendant no.1 as principal borrower and defendant no. 3 & 4 as guarantors signed and executed bank's security documents and guarantee agreement on 27.09.2011.

In order to secure the due repayment of the applicant bank, the defendant no. 2 mortgaged his immovable property i.e. Plot No. 539, admeasuring 510 Sq. meters, situated at Village Maurapara, PO Khewar, Pargana Mijhaura, District Ambedkar Nagar, U.P. by deposit of title deed in favour of the applicant bank.

The Defendant nos.1 & 2 have availed the credit facilities but did not maintained financial discipline and subsequently the loan accounts became irregular. The defendant nos.1 & 2 failed to keep the said loan accounts regular and also neglected to liquidate the same in accordance with the agreed terms and condition. The defendant no. 3 & 4 also failed to honour their commitment given in the guarantee agreement. As a result, the said account became very sticky in operation and classified as NPA on 26.08.2013. The Applicant Bank requested the defendants for adjusting the bank's dues outstanding in the loan account but the defendants neither approached the applicant bank nor paid the dues. Thereafter, the applicant bank issued Demand notice dated 31.10.2013 to the defendants u/s 13(2) of SARFAESI Act, 2002 and Possession Notice dated 25.02.2014 u/s 13(4) of SARFAESI Act, 2002 against the defendants but the defendants failed to liquidate the dues of the applicant bank.

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 28.11.2016 & 24.10.2019, 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 28.11.2016 & 24.10.2019, 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 12.02.2020 in "Hindustan", 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 18.03.2024.

5- To prove its case, the applicant Bank has referred attested copies of various documents before this Tribunal on 04.11.2016. The applicant bank has also given evidence on affidavit by way of affidavit of Shri Kundan Jee Sahay, 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 Power of Attorney</td> <td>24.10.2003</td>

<td>Bank</td> <td>A- 1</td> </tr> <tr> <td>2</td> <td>Copy of Loan Application</td> <td>12.07.2011</td> <td>Rs. 9.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 2</td> </tr> <tr> <td>3</td> <td>Copy of Loan Agreement</td> <td>27.09.2011</td> <td>Rs. 2.50</td> <td>Def. No. 1 &amp; 2</td> <td>A- 3</td> </tr> <tr> <td>4</td> <td>Copy of Agreement of Hypothecation to secure demand Cash Credit against goods</td> <td>27.09.2011</td> <td>Rs. 6.50</td> <td>Def. No. 1 &amp; 2</td> <td>A- 4</td> </tr> <tr> <td>5</td> <td>Copy of Supplementary Agreement</td> <td>27.09.2011</td> <td>Rs. 9.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 5</td> </tr> <tr> <td>6</td> <td>Copy of the Letter of Continuity</td> <td>27.09.2011</td> <td>Rs. 6.50</td> <td>Def. No. 1 &amp; 2</td> <td>A- 6</td> </tr> <tr> <td>7</td> <td>Copy of Letter of Understanding</td> <td>27.09.2011</td> <td>Rs. 10.00</td>

<td>A- 7</td> </tr> <tr> <td>8</td> <td>Copy of Letter of consideration</td> <td>27.09.2011</td> <td>Rs. 10.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 8</td> </tr> <tr> <td>9</td> <td>Copy of Demand</td> <td>27.09.2011</td> <td>Rs. 10.00</td> <td>Def. No. 1 &amp;</td> <td>A- 9</td> </tr> </tbody> </table>

4DRT, ALLAHABADTA 64 of 2019 [J]

<table border="1"> <tr> <td></td> <td>Promissory Note</td> <td></td> <td></td> <td>2</td> <td></td> </tr> <tr> <td>10</td> <td>Copy of Form of Guarantee for advances &amp; Credit Generally</td> <td>27.09.2011</td> <td>Rs. 10.00</td> <td>Def. No. 3 &amp; 4</td> <td>A- 10</td> </tr> <tr> <td>11</td> <td>Copy of Letter of Understanding</td> <td>27.09.2011</td> <td>Rs. 10.00</td> <td>Def. No. 4</td> <td>A- 11</td> </tr> <tr> <td>12</td> <td>Copy of Guarantors Consent Letters</td> <td>27.09.2011</td> <td>Rs. 10.00</td> <td>Def. No. 3 &amp; 4</td> <td>A- 12</td> </tr> <tr> <td>13</td> <td>Copy of Title Deed</td> <td>01.02.2011</td>

<td>Def. No. 2 &amp; 3</td> <td>A- 13</td> </tr> <tr> <td>14</td> <td>Copy of Note</td> <td>29.09.2011</td> <td>-----</td> <td>Bank</td> <td>A- 14</td> </tr> <tr> <td>15</td> <td>Copy of Notices</td> <td>01.05.2012</td> <td>Rs.<br/>2,70,192/-<br/>and Rs.<br/>6,83,251/-</td> <td>Bank</td> <td>A- 15</td> </tr> <tr> <td>16</td> <td>Copy of Notice under 13(2)</td> <td>31.10.2013</td> <td>Rs.<br/>11,57,405/-<br/>-</td> <td>Bank</td> <td>A- 16</td> </tr> <tr> <td>17</td> <td>Copy of Notice under 13(4)</td> <td>25.02.2014</td> <td>Rs.<br/>11,57,405/-<br/>-</td> <td>Bank</td> <td>A- 17</td> </tr> <tr> <td>18</td> <td>Copy of Term Loan Account Statement</td> <td>03.11.2016</td> <td>Rs.<br/>4,28,474/-</td> <td>Bank</td> <td>A- 18</td> </tr> <tr> <td>19</td> <td>Copy of Cash Credit Account Statement</td> <td>03.11.2016</td> <td>Rs.<br/>16,68,207/-<br/>-</td> <td>Bank</td> <td>A- 19</td> </tr> </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 loans and utilized the same and also executed the various loans documents to secure the loans. 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 TA.

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 TA and requested to issue recovery certificate, as claimed for, in TA.

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 26.08.2013, whereas the present application has been filed on 04.11.2016. 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 Kundan Jee Sahay, 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 loans and the bank had sanctioned the loans and to secure the loans and for repayment of loans amount with interests etc., the defendants have executed various loans 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. 16,68,207/- with cost and further interest @ 14.25% per annum with monthly rests, from 04.11.2016 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.

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 with interest, from defendants, jointly and severally **Rs. 16,68,207/-** alongwith pendentelite and future interest @ 10% simple per annum from 04.11.2016 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 with interest, from defendants, jointly and severally, amounting to **Rs. 16,68,207/-** alongwith pendentelite and future interest @ 10% simple per annum from 04.11.2016 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 in the light of Judgment.

Parties are directed to appear before the Recovery Officer, DRT, Allahabad on 30.05.2024. The order be communicated accordingly.

Judgment signed, sealed, dated and pronounced in the open court on this 20^th Day of March, 2024.

Dictated & Corrected by me.

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

[R. M. Kushawaha]¹ Presiding Officer Debts Recovery Tribunal, Allahabad