CANARA BANK (SYNDICATE BANK) vs M/S WIC-CHEM (P) LTD. on 11 January 2023

1. 1. The Applicant bank has made this application u/s 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (here-in-after referred to as Act) on 01.04.2014, against the defendants to recover **Rs.2,23,60,493.68** alongwith pendentelite and future interest @ 19% per annum with monthly rest from 01.02.2014 with costs till realization.

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

3. 3. The brief facts of the case of the applicant bank as stated in the application are as under- The applicant (**Erstwhile Syndicate Bank**) is a Body Corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, having its Head Office at 112, J.C. Road, Bangalore and a Branch Office at Maholi Road, District : Mathura (U.P.).

The brief history of the case as gathered from the Original Application are that the defendant no. 2 to 4 are Directors of defendant no. 1 firm. The defendant nos. 2 to 4 for defendant no. 1, approached the applicant bank for grant of financial assistance. The applicant bank considered the request of the defendants and sanctioned OSL (Term Loan) of Rs. 46.50 lac and O.D.H. of Rs. 24.00 lac together with interest thereon vide its sanction letter dated 19.11.2005. The said credit facilities were repayable in instalments + interest.

Upon sanctioning of the said credit facilities, the defendant nos.2 to 4 for defendant no. 1 as Principal Borrowers and guarantors, signed and executed bank's security documents on 24.08.2006 in favour of the applicant bank. The defendant no. 1 created equitable mortgage of its immoveable property namely Land & building standing over Plot No. C-38, area measuring 6446 sq. mtr at C-38, Industrial Area, Site -A, District : Mathura owned by defendant no. 1 in favour of the Applicant Bank At further request of the defendants, the Applicant Bank sanctioned Rs. 4.00 lac in the shape of OSL credit facility vide its sanction letter dated 25.06.2007 and in consideration thereof the defendants in order to secure the credit facility executed and signed various security documents on 20.07.2007 in favour of the Applicant Bank.

It is further submitted that the applicant bank had disbursed the loan amount in favour of defendant no.1. It is further submitted that the defendant no. 2 to 4 being guarantors of defendant no. 1 signed and executed various loan documents in favour of the applicant bank on 24.08,2006 and on 20.07.2007 respectively.

The defendants availed the said credit facilities but could not adhere with the terms and conditions of the said advance and failed to deposit the monthly instalment regularly and punctually as agreed. The defendant no. 2 to 4 being borrower and guarantors also failed to comply with the terms and conditions mentioned in guarantee agreement and as such a huge amount have become due against the defendants. As a result the account became very sticky in operation and became non performing assets on 31.12.2010. However, the defendants signed and executed various loan documents and confirmed the debt.

4. The applicant bank requested the defendants for adjusting the bank's dues but the defendants neither approached the bank nor paid the dues.

5 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.

6. 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 05.03.2021 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 but the defendants did not appear.

7. The defendants appeared through their Ld. Counsel by filing their written statement as also Written Arguments contested the claim of the Bank. The defendants have admitted the availment of credit facilities granted by the Applicant Bank to them, execution of documents in favour of the Applicant Bank and further pleaded that the bank has charged the rate of interest very higher side and ultimately prayed for reducing of rate of interest.

8. Arguments heard from both side and perused the case record and considered.

9. To prove its case, the applicant Bank has referred attested copies of various documents before this Tribunal with its Original Application on 01.04.2014. The applicant bank also filed Affidavit in Evidence of Shri Puran Chand Singla, Senior Manager. 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> </table>

<table border="1"> <tr> <td>1</td> <td>General power of attorney</td> <td></td> <td></td> <td>Bank</td> <td>1</td> </tr> <tr> <td>2.</td> <td>Certificate of Incorporation</td> <td></td> <td></td> <td>Def. Nos. 2 to 4 for Def. No. 1</td> <td>2</td> </tr> <tr> <td>3.</td> <td>Sanction letter</td> <td>19.11.2005</td> <td>70.50</td> <td>Bank</td> <td>3</td> </tr> <tr> <td>4.</td> <td>Pronote for Rs. 9 lac and Rs. 3.00 lac</td> <td>21.05.2006</td> <td>3.00</td> <td>Def. Nos. 2 to 4 for Def. no. 1</td> <td>4 &amp; 5</td> </tr> <tr> <td>5.</td> <td>Pronote for Rs. 1 lac</td> <td>27.05.2006</td> <td>1.00</td> <td>Def. Nos. 2 to 4 for Def. no. 1</td> <td>6</td> </tr> <tr> <td>6.</td> <td>Pronote</td> <td>27.05.2006</td> <td>1.00</td> <td>Def. Nos. 2 to 4 for Def. no. 1</td> <td>7</td> </tr> <tr> <td>7.</td> <td>Pronote</td> <td>24.05.2006</td> <td>9.50</td> <td>Def. Nos. 2 to 4 for Def. no. 1</td> <td>8</td> </tr> <tr> <td>8.</td> <td>Pronote</td> <td>24.05.2006</td> <td>2.00</td> <td>Def. Nos. 2 to 4 for Def. no. 1</td> <td>9</td> </tr> <tr> <td>9.</td> <td>Pronote</td> <td>15.11.2006</td> <td>8.00</td> <td>Def. Nos. 2 to 4 for Def. no. 1</td> <td>10</td> </tr> <tr> <td>10.</td> <td>Pronote</td> <td>11.09.2006</td> <td>2.00</td> <td>Def. Nos. 2 to 4 for Def. no. 1</td> <td>11</td> </tr> <tr> <td>11.</td> <td>Pronote</td> <td>11.01.2007</td> <td>2.45</td> <td>Def. Nos. 2 to 4 for Def. no. 1</td> <td>12</td> </tr> <tr> <td>12.</td> <td>Pronote</td> <td>16.0.2007</td> <td>6.55</td> <td>Def. Nos. 2 to 4 for Def. no. 1</td> <td>13</td> </tr> <tr> <td>13.</td> <td>Pronote</td> <td>10.05.2007</td> <td>1.00</td> <td>Def. Nos. 2 to 4 for Def. no. 1</td> <td>14</td> </tr> <tr> <td>14.</td> <td>Pronote</td> <td>26.05.2007</td> <td>1.00</td> <td>Def. Nos. 2 to 4 for Def. no. 1</td> <td>15</td> </tr> <tr> <td>15.</td> <td>Pronote</td> <td>20.07.2007</td> <td>4.00</td> <td>Def. Nos. 2 to 4 for Def. No. 1</td> <td>16</td> </tr> <tr> <td>17.</td> <td>Title Deed</td> <td>10.12.2015</td> <td></td> <td>Def No. 1</td> <td>17</td> </tr> <tr> <td>18.</td> <td>Sanction letter</td> <td>25.06.2007</td> <td>4.00</td>

<td>18</td> </tr> <tr> <td>19.</td> <td>Board's resolution</td> <td>16.07.2007</td> <td>4.00</td> <td>Def. no. 3 for Def. No. 1</td> <td>19</td> </tr> <tr> <td></td></tr></table>

5DRT, ALLAHABADOA TA 05 of 2021 [J]

<table border="1"> <tr> <td></td> <td>Hypothecation Agreement</td> <td></td> <td></td> <td>for Def. No. 1</td> <td></td> </tr> <tr> <td>21.</td> <td>Confirmation of creation of mortgage</td> <td>20.07.2007</td> <td></td> <td>Def. No. 3 for Def. No. 1</td> <td>21</td> </tr> <tr> <td>22.</td> <td>Agreement of guarantee</td> <td>20.07.2007</td> <td></td> <td>Def. Nos. 2 to 4</td> <td>22</td> </tr> <tr> <td>23.</td> <td>Boards resolution</td> <td>14.07.2008</td> <td>46.44<br/>3.90<br/>27.21<br/>30.00</td> <td>Def. No. 1</td> <td>23</td> </tr> <tr> <td>24.</td> <td>Composite Hypothecation Agreement</td> <td>18.07.2008</td> <td></td> <td>Def. No. 3 for Def. No. 1</td> <td>24</td> </tr> <tr> <td>25.</td> <td>Confirmation of creation of second mortgage</td> <td>18.07.2008</td> <td></td> <td>Def. No. 3 for def. no. 1</td> <td>25</td> </tr> <tr> <td>26.</td> <td>Agreement of guarantee</td> <td>18.07.2008</td> <td></td> <td>Def. Nos. 2 to 4 for Def. no. 1</td> <td>26</td> </tr> <tr> <td>27.</td> <td>Accounts certified with Registrar of Companies</td> <td>04.07.2008</td> <td></td> <td>Def. No. 1</td> <td>27</td> </tr> <tr> <td>28.</td> <td>Sanction letter &amp; rephasement</td> <td>05.02.2009</td> <td></td> <td>Def. no. 1</td> <td>28 &amp; 29</td> </tr> <tr> <td>29.</td> <td>Letter acknowledgment</td> <td>16.05.2011<br/>31.03.2011</td> <td></td> <td>Def. No. 1</td> <td>30 &amp; 31</td> </tr> <tr> <td>30.</td> <td>Statement of accounts</td> <td></td> <td></td>

<td>32, 33, 34 &amp; 35</td> </tr> </table>

10. Ld. Counsel for the 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.

11. The Ld. Counsel for the defendants in their Written Statement pleaded that the Original/Transferred application is highly time barred and liable to be dismissed, the present TA is not maintainable, only lease rights was mortgaged with the bank and no equitable mortgaged was created over the factory, land and building, the Applicant Bank not filed proper statement of accounts in support of its case. It is further pleaded that artificial creation of period of limitation by means of Demand Notice dated 04.01.2011 is illegal and fake LAD dated 16.05.2011 are not admissible as per the Evidence Act, for the purpose of computation of Limitation hence the present TA is liable to be dismissed on this count

alone. It is further pleaded that UPSIDC also moved an Appeal No. 105 of 2012 before ADJ, Mathura against the claim of the Jai Gurudev Dharm Sanstha and other and others and it has been held that entire acquisition of UPSIDC has been quashed by the Hon'ble High Court vide its order in Writ No. 7575 / 1974 and has attained the finality hence the entire loan documents are void and entire proceedings of the Bank are null, void and ab-initio. It is further pleaded that so far the Exhibit A/30 is concerned had been got on blank undated formate signed under pressure at the time of sanction of loan and none of the answering defendant had filled or signed the same on 16.05.2011 as it does not accompany a duly signed by the borrower Statement of Account of that date. However, at the time of final arguments, the Ld. Counsel admitted the availment of the credit facilities granted by the Applicant Bank to them, execution of documents in favour of the Applicant Bank and the bank has charged the rate of interest very higher side and ultimately prayed for reducing of rate of interest.

12. It has been established that defendants are living 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.

13. On the issue of Limitation, to prove it, the applicant bank has submitted that the applicant bank has declared the account as NPA on 31.12.2010, whereas the present application has been filed on 01.04.2014. 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.

14. In the affidavit of Shri Puran Chand Singla, 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.

15. The documents as stated above reveal that the defendants have applied for the 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 strengthen the case of the applicant bank.

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

17. Since, the defendants have admitted, so the 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 Accounts, 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.

Further, the defendants pleaded that so far the Exhibit A/30 is concerned had been got on blank undated format signed under pressure at the time of sanction of loan and none of the answering defendant had filled or signed the same on 16.05.2011.

A bare perusal of the case records, it reflects that the defendants have not filed any documents in support of their said fact. It is further pleaded that the Applicant Bank got some printed blank papers signed and use the same as and when required.

I have considered the pleadings of answering defendants. It is pertinent to mention here that the Original Application was filed on 01.04.2014 and defendants have filed their written statement on 22.05.2015 whereas defendant no. 1 to 3 has filed their additional Written Statement on 04.03.2022 and counsel for defendants advanced their arguments on 21.12.2022. But during this period, said defendants or any other defendants have not filed any complaint against the applicant bank in Police or any Higher authorities claiming the said documents were got signed in blank. Once defendants took specific defence that documents are fabricated it was incumbent upon the defendants to prove their alleged defence. The defendants have failed to prove their defence that the bank utilized the documents which was previously signed by the defendants on blank printed form for taking advance. Thus the defence as taken by the defendants is not tenable.

18. 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 was availed by the defendants as stated in the application.

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

20. The applicant bank has sought for recovery of following sum with costs till realization:

- (i) Rs. 1,12,72,656.27 outstanding in OSL I Account;

- (ii) Rs. 8,91,474.09 outstanding in OSL – I account ;

- (iii) Rs. 32,78,039.72 outstanding in OSL II Account ;

- (iv) Rs. 69,18,323.60 outstanding in W.C.T.L account ; together with interest @ 19% per annum with monthly rest from 01.02.2014 (Defendant Nos. 1 to 4)

**Total amounting to Rs.2,23,60,493.68**

21. Learned Advocate appearing for the 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.

22. 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. However, looking to the facts and circumstances of the case and in the interest of natural justice the defendants deserve some leniency in the rate of interest.

23. The defendants appeared before the Tribunal admitted 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.

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 pleading 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 admissions.*

24. 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."*

25. In my view, the case of the bank is well proved by evidence of the applicant bank. The applicant bank is entitled to receive its debt **Rs.2,23,60,493.68** (Rs. Two crore twenty three lac sixty thousand four hundred ninety three and paise sixty eight only ) from the defendants jointly and severally alongwith pendentelite and future interest @11% simple from 01.02.2014 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 **Rs.2,23,60,493.68 (Rs. Two crore twenty three lac sixty thousand four hundred ninety three and paise sixty eight only)** from the defendants jointly and severally alongwith pendentelite and future interest @11% simple from 01.02.2014 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 hypothecated and mortgaged properties of the Defendant nos.1 to 4 in execution proceedings. The amount, if any, already recovered by sale of hypothecated and mortgaged 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 Defendant nos.1 to 4 jointly and 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 and mortgaged properties their other immovable/movable property/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.

Parties are directed to appear before the Recovery Officer, DRT, Allahabad on 29.03.2023. The order be communicated accordingly.

Judgment signed, sealed, dated and pronounced in the open court on this 11^th Day of January, 2023.

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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