BANK OF BARODA vs M/S MOONUP INFOTECH PVT. LTD., on 26 April 2024

1. 1. **M/s Moonup Infotech Pvt. Ltd.**, having its Registered Office at 18/13, W.E.A. Karol Bagh, New Delhi – 110005. Business Place: Risal Singh Nagar, ITI Road, Risal Singh Nagar, Aligarh – 202001.

2. 2. **Sri Abhishek Kumar Varshney**, S/o Sri Ashutosh Kumar Varshney, R/o Risal Singh Nagar, ITI Road, Risal Singh Nagar, Aligarh.

3. 3. **Sri Ashutosh Kumar Varshney**, S/o Sri Ayodhya Prasad Varshney, R/o ITI Road, Rishal Singh Nagar, Aligarh.

4. 4. **Sri Ashish Varshney**, S/o Sri Ashutosh Kumar Varshney, R/o Risal Singh Nagar, ITI Road, Risal Singh Nagar, Aligarh.

5. 5. **Smt. Anshu Varshney**, W/o Sri Abhishek Varshney, Risal Singh Nagar, ITI Road, Risal Singh Nagar, Aligarh.

6. 6. **Smt. Anju Varshney**, W/o Sri Ashutosh Kumar Varshney, R/o ITI Road, Rishal Singh Nagar, Aligarh.

...Defendants.

Present:

**For the Applicant**

: Shri Avinash Jaiswal, Advocate

**For the Defendants**

: Exparte

**Dated: 26.04.2024****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 25.08.2014, before the DRT, Lucknow against the defendants to recover its debts from defendants of Rs. 2,39,85,721/- alongwith pendentelite and future interest @ 11.50% per annum with monthly rest from the date of filing 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. 662/2014 was transferred from DRT, Lucknow to this Tribunal.

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

Undertakings) Act V of 1970, having its Head Office at Mandvi Baroda in the State of Gujarat, and Corporate Office at Baroda Corporate Centre, C – 26, G – Block, Bandra – Kurla Complex, Bandra (East), Mumbai – 400051 and among other places a branch known as Aligarh Main Branch, Tulsi Arcade, Masoodabad, New Bus Stand Aligarh, District – Aligarh, U.P. – 202001.

The facts of the case as contained in the application are that at the request of defendant no. 1 through loan application dated 15.07.2009 for credit facilities that is Term Loan of Rs.2.61 Crores under Baroda Vidya Sthali Loan Scheme for purchasing of Laptops. The applicant bank agreed to grant to the defendants no.1, the said term loan of Rs.261.00 lakhs repayable in three equal half yearly installments of Rs,87.00 lakhs each, commencing from March 2010 and ending on March 2011 after moratorium period of maximum six months to the applicant together with interest thereon @0.50% below BPLR of the bank with minimum of 11.50% per annum with monthly rests subject to change in BPLR as stipulated under Baroda Vidya Sthali Loan Scheme as may be fixed from time to time and all costs, charges and expenses, on defendant executing the documents and creating securities in favour of the applicant as mentioned hereinafter That the defendant no. 1 company vide it's Board Resolution dated 02.09.2009 resolved that the credit facility sanctioned by the applicant bank be availed and the security be created and security documents be executed by Sri Ashutosh Kumar Varshney and Sri Abhishek Varshney for which they were duly authorized.

In order to secure the due repayment in the Term Loan of Rs 261.00 lakhs, together with all interests, costs, charges and expenses, defendant executed in favour of and delivered to the applicant on 02.09.2009 the several security documents.

The charges on hypothecated stocks and movables are registered in the office of Registrar of Companies, Kanpur.

In order to further to secure the repayment of the balance outstanding in the term loan of Rs261.00 lakhs in the account of the defendant no.1, the defendant no. 3 and 6 visited the applicant's branch at Aligarh Branch at Aligarh on 02.09.2009 and made constructive delivery of original title deed of their respective immovable properties described below and extended the extent of mortgages created by them earlier upon their respective immovable properties, to also secure the credit facilities granted by the applicant to the defendant no.1 in addition to the credit facilities granted in other accounts, that is in account of M/s Moon Up enterprises to the tune of Rs.455.00 lakhs, M/s Moon Products to the tune of Rs.280.00 lakhs, Akanksha International to the tune of Rs.75.00 lakhs and OD of Rs.100 lakhs in the account of Ashutosh Kumar Varshney, that is aggregate sum of security amounting to Rs 1171.00 lakhs together with all interest costs, charges and expenses, with intent to create security by way of equitable mortgage and orally confirmed to Mr. BN Shirdewala, Senior Branch Manager of the bank's Aligarh branch at Aligarh in the presence of Sri C P Verma Manager of the applicant bank, that equitable mortgages created by the said defendants by constructive delivery of title deeds in respect of immovable properties described below belonging to them and situated at Village Rasoolpur Kasba Pargana and Tehsil Koil and Village Rasoolpur Swaad(Kasba Koil) within District Aligarh was to secure the aggregate limits and credit facilities to defendants and sister /group accounts granted by the Applicant Bank together with interest thereon and all costs charges and expenses payable to the Bank.

The details of the property and the mortgages created thereon are described as under:- Property No. 1 owned by Sri Ashutosh Kumar Varshney:- *Land and Building and Structures standing thereon or to be constructed, measuring 167.22 Sq. Mtrs. bearing Khasra No. 3793 situated at Village Rasoolpur Swad Kasba Koil Pargana & Tehsil Koil District Aligarh.*

Property No. 2 owned by Sri Ashutosh Kumar Varshney:- *Land and Building and structures standing thereon or to be constructed, measuring 128 Sq. Mtrs. within Municipal Limit in Village Rasoolpur Swad Kasba Koil Pargana & Tehsil Koil District Aligarh.*

Property No. 3 owned by Sri Ashutosh Kumar Varshney:- *House comprising of Land and Building and structures standing thereon or to be constructed, measuring 163 Sq. Mtrs. bearing Nagar Mahapalika No. 5/323A and 5/324 situated at ITI Road, Rasoolpur Swad Kasba District Aligarh.*

Property No. 4 owned by Sri Ashutosh Kumar Varshney:- *Land and Building and structures standing thereon or to be constructed, measuring 83.61 Sq. Mtrs. Khasra No. 3793 situated at Village Rasoolpur Swad Kasba and Tehsil Koil District Aligarh.*

Property No. 5 owned by Sri Ashutosh Kumar Varshney:- *Land and Building and structures standing thereon or to be constructed, measuring 211.2 Sq. Mtrs. in Khet No. 273 situated at Village Rasoolpur Swad Kasba and Tehsil Koil District Aligarh.*

Property No. 6 owned by Sri Ashutosh Kumar Varshney:- *Land and Building and structures standing thereon or to be constructed, measuring 176 Sq. Mtrs. situated at Village Rasoolpur Swad [ITI Road] Kasba and Tehsil Koil District Aligarh.*

Property No. 7 owned jointly by Sri Ashutosh Kumar Varshney & Smt. Anju Varshney:- *Land and Building and structures standing thereon or to be constructed, measuring 2262.60 Sq. Mtrs. in Khasra No. 3793 & 3794 situated at Village Rasoolpur Swad Kasba and Tehsil Koil District Aligarh.*

Property No. 8 owned jointly by Sri Ashutosh Kumar Varshney & Smt. Anju Varshney:- *Land and Building and structures standing thereon or to be constructed, measuring 256 Sq. Mtrs.*

*Land and Building and structures standing thereon or to be constructed, measuring 482.94 Sq. Mtrs. out of total area of 512 Sq. Mtrs. situated within Abadi of Village Rasoolpur Swad Kasba and Tehsil Koil District Aligarh.*

Property No. 10 owned by Sri Ashutosh Kumar Varshney:- *Land and Building and structures standing thereon or to be constructed, measuring 211.2 Sq. Mtrs. in Khasra No. 3791 & 3795 situated within Abadi at Village Rasoolpur Swad Par and Tehsil Koil District Aligarh.*

The aggregate amount secured in all accounts amounting to Rs.1171.00 lakhs, together with interest thereon @ 1.25% over BR then prevailing @.11.50% per annum with monthly rests subject to change from time to time as per RBI directives.

The defendants did not pay the installments and consequently the overdue installments were converted into Funded Interest Term Loan of Rs. 35.00 lakhs for which the defendants executed relevant security documents, however as the FITL account has been closed hence for the sake of brevity, description and details of FITL availed by the defendant no.1 company is not being given here.

On 06.07.2010 and thereafter on 01.08.2012 the defendants executed and delivered letters of acknowledgment of debt and security by which the defendants acknowledged and admitted their indebtedness of a sum of Rs. 2,68,00,143=80 as on 06.07.2010 and Rs. 1,98,29,348-00 as on 01.08.2012 together with interest thereon By the said letters the defendants also confirmed and acknowledged that the security documents and securities created by them including the hypothecation of stock and mortgages created as security were still in full force, valid, effective and enforceable.

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 31.03.2013. The applicant Bank sent Legal/ demand notice on 26.07.2013 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 accounts comes to Rs. 2,39,85,721/- 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 28.04.2023, 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 28.04.2023, 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 17.12.2023 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 25.04.2024.

5- To prove its case, the applicant Bank has referred attested copies of various documents before this Tribunal on 25.08.2014. The applicant bank has also given evidence on affidavit by way of affidavit of Shri Girish K. Agarwal, Chief Manager and Principal Officer 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 Memorandum and Articles of Association and Certificate of Incorporation</td> <td>--</td> <td>--</td> <td>--</td> <td>A- 1</td> </tr> <tr> <td>2</td> <td>Copy of the Board Resolution</td> <td>--</td> <td>--</td> <td>--</td> <td>A- 2</td> </tr> <tr> <td>3</td> <td>Copy of the Sanction Letter with acceptance and Acknowledgement of the terms and conditions of Loan and Sanction</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 1 to 6</td> <td>A- 3</td> </tr> <tr> <td>4</td> <td>Copy of the D. P. Note</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 2 &amp; 3</td> <td>A- 4</td> </tr> <tr> <td>5</td> <td>Copy of the Letter of Installment with Acceleration clause</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 2 &amp; 3</td> <td>A- 5</td> </tr> <tr> <td>6</td> <td>Copy of the Composite Hypothecation Agreement</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 2 &amp; 3</td> <td>A- 6</td> </tr> <tr> <td>7</td> <td>Copy of the Letter of Authority to make direct payment to Dealer</td> <td>02.09.2009</td> <td>351.00</td> <td>Def. 2 &amp; 3</td> <td>A- 7</td> </tr> <tr> <td>8</td> <td>Copy of the Declaration cum Undertaking cum Authority (LDOC-134)</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 2 to 6</td> <td>A- 8</td> </tr> <tr> <td>9</td> <td>Copy of the Undertaking (LDOC-64)</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 1, 2 &amp; 3</td> <td>A- 9</td> </tr> <tr> <td>10</td> <td>Copy of the General Undertaking</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 2 &amp; 3</td> <td>A</td></tr></tbody></table>

<table border="1"> <tr> <td>12</td> <td>Copy of the Letter of Authority</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 2 &amp; 3</td> <td>A- 12</td> </tr> <tr> <td>13</td> <td>Copy of the General Form of Guarantee</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 2 to 6</td> <td>A-13</td> </tr> <tr> <td>14</td> <td>Copy of the Attestation Memo</td> <td>02.09.2009</td> <td>261.00</td> <td>--</td> <td>A-14</td> </tr> <tr> <td>15</td> <td>Copy of the Report in respect of Registration of Charges before the ROC Kanpur</td> <td>02.09.2009</td> <td>261.00</td> <td>--</td> <td>A-14A</td> </tr> <tr> <td>16</td> <td>Copy of the Title Deed</td> <td>--</td> <td>--</td> <td>--</td> <td>A-15</td> </tr> <tr> <td>17</td> <td>Copy of the Title Deed</td> <td>--</td> <td>--</td> <td>--</td> <td>A-16</td> </tr> <tr> <td>18</td> <td>Copy of the Title Deed</td> <td>--</td> <td>--</td> <td>--</td> <td>A-17</td> </tr> <tr> <td>19</td> <td>Copy of the Title Deed</td> <td>--</td> <td>--</td> <td>--</td> <td>A-18</td> </tr> <tr> <td>20</td> <td>Copy of the Title Deed</td> <td>--</td> <td>--</td> <td>--</td> <td>A-19</td> </tr> <tr> <td>21</td> <td>Copy of the Title Deed</td> <td>--</td> <td>--</td> <td>--</td> <td>A-20</td> </tr> <tr> <td>22</td> <td>Copy of the Title Deed</td> <td>--</td> <td>--</td> <td>--</td> <td>A-21</td> </tr> <tr> <td>23</td> <td>Copy of the Title Deed</td> <td>--</td> <td>--</td> <td>--</td> <td>A-22</td> </tr> <tr> <td>24</td> <td>Copy of the Title Deed</td> <td>--</td> <td>--</td> <td>--</td> <td>A-23</td> </tr> <tr> <td>25</td> <td>Copy of the Title Deed</td> <td>--</td> <td>--</td> <td>--</td> <td>A-24</td> </tr> <tr> <td>26</td> <td>Copy of the Title Deed</td> <td>--</td> <td>--</td> <td>--</td> <td>A-25</td> </tr> <tr> <td>27</td> <td>Copy of the Extension of Mortgage by deposit of title deeds and extensions in other account of Moon Up Enterprises and Moon Products and OD account of Ashutosh Varshney (LDOC-90D)</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 2 &amp; 3</td> <td>A-26</td> </tr> <tr> <td>28</td> <td>Copy of the Declaration in the matter of extension of mortgage by deposit of title deeds (LDOC-90C)</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 3 &amp; 6</td> <td>A-27</td> </tr> <tr> <td>29</td> <td>Copy of the Letter of Confirmation (LDOC-90J)</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 3 &amp; 6</td> <td>A-28</td> </tr> <tr> <td>30</td> <td>Copy of the Attendance Sheet Annexure-A</td> <td>02.09.2009</td> <td>261.00</td> <td>Def. 3 &amp; 6</td> <td>A-29</td> </tr> <tr> <td>31</td> <td>Copy of the Letter of Confirmation of Mortgage Creation/Extension</td> <td>06.07.2010</td> <td>35.00</td> <td>Def. 3 &amp; 6</td> <td>A-30</td></tr></table>

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 31.03.2013, whereas the present application has been filed on 25.08.2014. 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 Girish K. Agarwal, Chief Manager and Principal Officer 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 unrebutted 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. 2,39,85,721/- with cost and further interest @ 11.50% per annum with monthly rest from the date of filing i.e. 25.08.2014 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 appears that the applicant has not charged interest against defendants in terms of documents and as per directives of R B I. It is to mention here that the Base Rate has been introduced in the year of 2010 which was always remain below 10%. Likewise the MCLR has been introduced in the year 2016 which was also remain below 8.50%, therefore, the Applicant Bank has charged the rate of interest on very higher side and against the guidelines of the RBI, issued by time to time. Accordingly, the defendants deserve 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 from defendants, jointly and severally Rs. 2,39,85,721/- alongwith pendentelite and future interest @10% Simple per annum from the date of filing i.e. 25.08.2014 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. 2,39,85,721/- alongwith pendentelite and future interest @10% Simple per annum from the date of filing i.e. 25.08.2014 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 11.06.2024. The order be communicated accordingly.

Judgment signed, sealed, dated and pronounced in the open court on this 26^th Day of April, 2024.

Dictated & Corrected by me.

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

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

AD