BARODA UTTAR PRADESH GRAMIN BANK vs SRI RAJDEV SINGH EDUCATIONAL AND WELFARE SOCIETY, on 26 April 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 12.07.2016 **before the DRT Lucknow** against the defendants to recover its debts from defendants of **Rs. 42,63,037** alongwith pendentelite and future interest @ 17% per annum with monthly rest with costs till realization.

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 Banking Company registered under Regional Rural Banking Act, 1976, sponsored by Bank of Baroda, having its Head Office at Raebareli and one of its Regional Office at Faizabad, through Mr. Ramesh Chandra Verma, Regional Manager and its Attorney Holder.

The facts of the case as contained in its application are that defendant no. 1 namely Sri Rajdev Singh Educational & Welfare Society, is a society duly registered with the registrar, Firms, Societies and Chits, Faizabad (UP) under U.P. Societies Act, 1860 and it runs a unit namely Ram Bux Singh Smarak Mahavidyalaya at Sakara Dakshin, Ambedkar Nagar (UP). Sri Rajdev Singh Educational & Welfare Society, having imparting of education in the society among its aims, resolved vide resolution dated 19.02.2012 for establishing of an educational institution for higher studies under the name and style of "Ram Bux Singh Smarak Mahavidyalaya" and it further resolved by the same resolution that the land for this institution be purchased at village Sakara Dakshin, Post Pura Badalhi, Distt. Ambedkar Nagar in the name of Ram Bux Singh Smarak Mahavidyalaya.

The defendant No. I further resolved vide its resolution dated 03.02.2013 to avail financial assistance from the applicant bank for construction of the building and development of the college and Smt. (Dr.) Arima Yadav, the Manager of the society (defendant No. 4) and Sri Subhash Chandra Yadav, the vice president of the society (defendant No. 5) were authorized for doing needful to avail such financial assistance from the applicant bank and execute the documents for and on behalf of the defendant No. I.

That the defendant No. 1, through its authorized persons being the Manager and the Vice Precedent, the defendant Nos. 4 and 5. approached the applicant bank through an application dated 24.04.2013 for availing a term loan of Rs. 35,00,000/- only for the purposes of constructions and furniture etc. and the Manager, the Vice President and the Treasurer of the society, the defendant Nos. 4. 5 and 6, assured the applicant bank in writing vide letter of undertaking dated 24.04.2013 that they are confident that the recognition to the said educational institution shall be available from the concerned department of the government and it, for any reason, the institution shall not have due recognition, they shall make the repayment of said loan to the applicant bank from their individual resources.

The defendant No. 1 through the defendant Nos. 4, 5 and 6 approached the applicant bank, the applicant bank, in its ordinary course of business, on certain terms and conditions, sanctioned on 18.06.2013 a term loan of Rs. 30,00,000/- to the defendant No. I on interest at the rate of 15% per annum (above 0.75% to BPLR, then 14.25%) repayable in 80 Monthly Equated Installments of Rs. 37,500/- + interest. The defendant No. 1, the borrower society, through its authorized signatories, the defendant Nos. 4 and 5. executed and delivered following documents in order to secure the repayment of said loan on 23.07.2013. The defendants no. 2,3,6,7,8,9 & 10 have stood as the guarantors and executed guarantee agreement on 23.07.2013 in favour of the applicant bank.

To secure the aforesaid credit facilities defendants created mortgaged of their immovable properties i.e. (i) Plot of Land being Gate No. 260 admeasuring 0.0760 Hect and Gata No. 276 admeasuring 0.9870 Hect. Total admeasuring 1.0630 hect. Situated at Village Sakara Dakshin, Pargana Surhurpur, Teshil Jalalpur, District Ambedkar Nagar, (ii) Plot of land being portion of Gata No. 265M admeasuring 0.0760 Hect. Situated at Village Sakara Dakshin, Pargana Surhurpur, Tehsil Jalalpur, District Amebdkar Nagar owned by defendant no. 1, (iii) Plot of Land being portion of Gata No. 1163 admeasuring 158.108 sq. mts. Only situated at Kanausi, Ward Kesari Khera, Lucknow, owned by defendant no. 9 (iv) House No. 51, admeasuring 53.10 sq. mts. Only at Rohini Awasiya Yojna, Tehsil Sadar, Faizabad, owned by defendant no. 8 in favour of the applicant bank on 23.07.2013

The defendant No. 5, as the authorized signatory of the defendant No. 1 and Smt. Maina Tripathi, the defendant No. 9 executed letter of confirmation of mortgage dated 18.07.2013 and Smt. Sharda Singh, the defendant No. 8, extended mortgage against her property mentioned above as property No. 4, already mortgage with the applicant bank in housing loan of Sri Satish to secure the repayment of the subject loan and executed and delivered letter of confirmation of extension of mortgage dated 23.07.2013 in favour of the applicant bank.

The defendants availed the aforesaid credit 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 defendant no. 1 became irregular and sticky and were declared NPA on 31.12.2015. The applicant bank compelled to recall the loan by serving the recall notice dated 30.06.2016 but 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 defendants. Accordingly the applicant bank has moved this T.A. to recover public money.

The total outstanding due in the accounts comes to **Rs. 42,33,027** inclusive of interests which has been claimed by means of present T.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 20.12.2022, 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.

The defendants have appeared through their counsel before this Tribunal to contest the case but failed to file written statement within stipulated period.

I have heard Ld counsel for the parties, considered and perused the record.

5- To prove its case, the applicant Bank has referred attested copies of various documents before DRT Lucknow on 12.07.2016. The applicant bank has also given evidence on affidavit by way of affidavit of Shri R.C. Verma, Chief 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>A copy of POA</td> <td>....</td> <td>.....</td> <td>Bank</td> <td>A- 1</td> </tr> <tr> <td>2</td> <td>Copy of the certificate of registration of the society defendant no. 1.</td> <td>04.03.2011</td> <td>..</td> <td>.....</td> <td>A- 2</td> </tr> <tr> <td>3</td> <td>Copy of the letter of memorandum of the society and bye laws</td> <td>16.03.2011</td>

<td>2,3,4,5,6, 8,</td> <td>A- 3</td> </tr> <tr> <td>4</td> <td>Copy of the resolution passed by the defendant no. 1.</td> <td>03.02.2013</td> <td></td> <td>2,3,4,5,6, 8,</td> <td>A- 4</td> </tr> <tr> <td>5</td> <td>Cop of the resolution dated 19.02.2013 passed by defendant no. 1.</td> <td>19.02.2012</td> <td>...</td> <td>2,3,4,5,6, 8,</td> <td>A- 5</td> </tr> <tr> <td>6</td> <td>Copy of Loan Application</td> <td>24.04.2013</td> <td></td> <td>4,5</td> <td>A- 6</td> </tr> <tr> <td>7</td> <td>Copy of the letter given by defendant no. 4,5,6.</td> <td>24.04.2013</td> <td></td> <td>Def. 4,5,6</td> <td>A- 7</td> </tr> <tr> <td>8</td> <td>Copy of sanction letter</td> <td>....</td> <td>30.00</td> <td>Def. 4,5,6</td> <td>A- 8</td> </tr> <tr> <td>9</td> <td>Copy of D.P Note</td> <td>23.07.2013</td> <td>30.00</td> <td>Def. 4,5,6</td> <td>A- 9</td> </tr> <tr> <td>10</td> <td>Copy of the agreement between the applicant bank and society by the member of the society as guarantors.</td> <td>23.07.2013</td> <td>30.00</td> <td>Def. 4,5</td> <td>A- 10</td> </tr> <tr> <td>11</td> <td>Cop of the letter of undertaking cum declaration</td> <td>23.07.2013</td>

<td>Def. 4,5</td> <td>A- 11</td> </tr> <tr> <td>12</td> <td>Copy of the Loan agreement</td> <td>23.07.2013</td> <td>30.00</td> <td>Def. 4,5</td> <td>A- 12</td> </tr> <tr> <td>13</td> <td>Copy letter of instalment with acclamation clause.</td> <td>23.07.2013</td> <td>30.00</td> <td>Def. 4,5</td> <td>A- 13</td> </tr> <tr> <td>14</td> <td>Copy</td></tr></tbody></table>

5DRT, ALLAHABADTA 81 of 2019 [J]

<table border="1"> <tr> <td>15</td> <td>Copy of letter of hypothecation of goods</td> <td>23.07.2013</td> <td>30.00</td> <td>Def. 4,5</td> <td>A- 15</td> </tr> <tr> <td>16</td> <td>Copy of authority letter for making payment to the dealers directly.</td> <td>23.07.2013</td> <td>30.00</td> <td>Def. 4,5</td> <td>A- 16</td> </tr> <tr> <td>17</td> <td>Copy of letter of guantree .</td> <td>23.07.2013</td> <td>30.00</td> <td>Def. 2,3,6,7,8, 9,</td> <td>A- 17</td> </tr> <tr> <td>18</td> <td>Copy of sale deed dated 12.04.2012 executed by defendant no. 1.</td> <td>....</td> <td>....</td> <td>.....</td> <td>A- 18</td> </tr> <tr> <td>19</td> <td>Copy of sale deed executed by Sri Virendra Bahadur Singh</td> <td>....</td>

<td>Def. 7</td> <td>A- 19</td> </tr> <tr> <td>20</td> <td>Copy of sale deed executed by Sri Pankaj Verma and another in favour of Smt. Maina Tripathi.</td> <td>....</td> <td>....</td> <td>Def. 9</td> <td>A- 20</td> </tr> <tr> <td>21</td> <td>Cop of sale deed executed by Sri Kripa Ram in favour of Smt. Sharda Singh .</td> <td>....</td> <td>....</td> <td>Def. 8</td> <td>A- 21</td> </tr> <tr> <td>22</td> <td>Copy of affidavit of Smt. Sharda Singh.</td> <td>....</td> <td>....</td> <td>Def. 8</td> <td>A- 22</td> </tr> <tr> <td>23</td> <td>Copy of letter of declaration of mortgage executed by Sri Subhash Chandra Yadav and Smt. Maina Tripathi defendant no. 5 &amp; 9.</td> <td>....</td> <td>....</td> <td>Def. 5,9.</td> <td>A- 23</td> </tr> <tr> <td>24</td> <td>Copy of letter of declaration of extension of mortgage executed by Smt. Sharda Singh defendant no. 8.</td> <td>27.08.2012</td> <td></td> <td>Def. 8</td> <td>A- 24</td> </tr> <tr> <td>25</td> <td>Copy of recall notice</td> <td>30.06.2016</td> <td>42.33</td> <td>Bank</td> <td>A- 25</td> </tr> <tr> <td>26</td> <td>Statement of Account.</td> <td>07.07.2016</td> <td>44,31,321/-</td> <td></td> <td>A- 26</td> </tr> </table>

6- Ld. counsel of applicant bank submitted that the defendants have taken the loans and utilized the same and also executed the various loan 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 an amount of Rs. 26,00,501/- has already been recovered, 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.

Ld counsel for the defendants admitted the avaliment of loan and liability. Ld counsel for the defendants submitted that defendants have availed the credit facility granted by the applicant bank to them and they have every intention to deposit the loan amount but the bank has charged the rate of interest very higher side and ultimately prayed for reducing of rate of interest.

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.10 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 30.12.2015, whereas the present application has been filed on 12.07.2016. 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 R.C. Verma, Chief 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 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- 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 of both the parties and on perusal of the application, documents, admission of defendants and affidavit, it is proved that the applicant bank has granted the loan facilities, documents were executed by the defendants and facilities was 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. 42,63,037** alongwith pendentelite and future interest @ 17% per annum with monthly rest with costs till realization. However, as per Ld. Counsel for the applicant bank an amount of Rs. 26,00,501/- has already been recovered, after filing of the TA.

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- The defendants have appeared before the Tribunal to contest the claim made by the applicant, and admitted the loan liability. 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. **The Section 58 of the Indian Evidence Act, 1872 reads as under:-**

**" 58. Facts admitted need not be proved-** *No fact need to be proved in any proceeding which the parties thereto or their agents agree to admit at the hearing, or which, before the hearing, they agree to admit by any writing under their hands, or which by any rule of pleadings in force at the time they are deemed to have admitted by their pleadings:*

*Provided that the Court may, in its discretion, require the facts admitted to be proved otherwise than by such admission"*

18- In Indian Bank Vs. Blue Jaggers 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."

19- 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. 16,62,436/- (Rs. 42,63,037.00 - Rs. 26,00,501/-) alongwith pendentelite and future interest @ 10% simple per annum from the date of filing of O.A. i.e. 12.07.2016 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 from defendants, jointly and severally, it's debts with interest, amounting to Rs. 16,62,436/- (Rs. 42,63,037.00 - Rs. 26,00,501/-) alongwith pendentelite and future interest @ 10% simple per annum from the date of filing of O.A. i.e. 12.07.2016 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, also disposed off.

Parties are directed to appear before the Recovery Officer, DRT, Allahabad on 04.07.2024. 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

mks