CANARA BANK vs M/S INFRA PRINTERS, on 30 January 2023

1. **M/s Infra Printers**, 107-A, Vijay Nagar Colony, Agra – 282004, U.P., through its Proprietor Sri Vishnu Gopal Agarwal.2. **Sri Vishnu Gopal Agarwal**, Proprietor, M/s Infra Printers R/o 58, North Vijay Nagar Colony, Agra – 282004, U.P.

...Defendants.

Present:

**For the Applicant** : Shri Himansu Tewari, Advocate**For the Defendants** : None**Dated: 30.01.2023****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 16.08.2010, against the defendants to recover its debts from defendants of Rs. 14,24,332.54ps. alongwith pendentelite and future interest at the contractual rate i.e. @ 15.50% + 2% Penal Interest per annum with monthly rest with costs till realization.

Subsequently, the case record of the present Original Application No. 225 of 2010 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 25 of 2018.

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 Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, having its Registered office at 112, J.C. Road, Bangalore – 560002 (Karnataka) and Branches all over India including One of its Branch i.e. SME Branch at Jeevan Prakash, LIC Building, Sanjay Place, Agra, U.P.

The brief facts of the case as contained in its original application are that the Defendant No. 1 is a proprietorship firm of which Defendant No. 2 is the sole proprietor and borrower of the Defendant No. 1 firm has been running business of Job Printing Works. The Defendant No. 2 for self and on behalf of Defendant No. 1 approached the Applicant Bank for grant of certain credit facilities and submitted loan application.

After considering the request of the Defendant No. 2 for self and on behalf of Defendant No. 1 and verification of the loan documents, the applicant Bank had sanctioned against the hypothecation of stocks of Open Cash Credit Limit of Rs. 5.00 Lacs under CGTSME Scheme of Government of India together with interest vide sanction letter dated 07.12.2004. The said limit was renewed on 07.12.2005 for one year tenable till 06.12.2006 and in consideration thereof, the defendants executed and signed several security loan document and guarantee agreement in favour of the Applicant Bank.

Further, the Defendant No. 1 & 2 approached the applicant Bank and applied for enhancement of said Limit by Sanction of Additional Limit of Rs. 2.00 Lacs i.e. from Rs. 5.00 Lacs to Rs. 7.00 Lacs with O.D.B.D. Limit of Rs. 3.00 Lacs upto 06.12.2007. Thereafter, it was extended for an other Three months i.e. upto 06.03.2008 for which defendants executed and signed several security loan documents and guarantee agreement in favour of the applicant bank.

Further, the defendants applied the additional OCC Limit of Rs. 3.00 Lacs and requested the applicant bank for enhance the said Cash Credit facility from Rs. 7.00 Lacs to Rs. 10.00 Lacs. The Applicant Bank considered the same and sanctioned/ enhanced the said Cash Credit Limit of Rs. 10.00 Lacs together with interest vide sanction letter dated 21.02.2009 and in consideration thereof, the defendant No. 2 on behalf of the Defendant No. 1 signed, executed and delivered the several security loan documents in favour of the Applicant Bank.

The Defendants availed the aforesaid loan/credit facility but failed to maintain financial discipline as per terms and conditions of the loan agreement due to which loan account become irregular. Despite repeated reminders and persuasion, the defendants failed to regularize the loan account. Consequently, the said account of the Defendants were classified as NPA on 31.12.2008 and recalled by Applicant Bank. The Defendants acknowledged the debt and executed an acknowledgement of Debt and Security letter in respect of Open Cash Credit Facility. Thereafter, Applicant Bank served Demand Notice dated 16.05.2009 to the Defendants to repay the outstanding dues but the defendants failed to make the payments of outstanding dues. Accordingly, the applicant Bank has moved this O.A. to recover public money.

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 21.08.2021, 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 21.08.2021, 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 18.12.2022 in "Amar Ujala" Agra edition, 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 09.01.2023.

5- To prove its case, the applicant Bank has referred attested copies of various documents before this Tribunal on 16.08.2010. The applicant bank has also given evidence on affidavit by way of affidavit of Shri S.B. Sharma, 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>Power of Attorney</td> <td>07.07.2003</td> <td>-----</td> <td>Bank</td> <td>A- A</td> </tr> <tr> <td>2</td> <td>Application Form for credit Facilities For SSI Unit</td> <td>07.12.2004</td> <td>-----</td> <td>Defendants</td> <td>A- 2</td> </tr> <tr> <td>3</td> <td>Sanction Letter of Credit Facilities</td> <td>07.12.2004</td> <td>Rs. 5.00</td> <td>Def No. 1 &amp; 2</td> <td>A- 3</td> </tr> <tr> <td>4</td> <td>Request Letter for Over Draft Facilities</td> <td>10.12.2004</td> <td>Rs. 5.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 4</td> </tr> <tr> <td>5</td> <td>Letter of Proprietorship</td> <td>10.12.2004</td> <td>-----</td> <td>Def. No. 2</td> <td>A- 5</td> </tr> <tr> <td>6</td> <td>Letter of Undertaking</td> <td>10.12.2004</td> <td>-----</td> <td>Def. No. 1 &amp; 2</td> <td>A- 6</td> </tr> <tr> <td>7</td> <td>Cash Credit Agreement</td> <td>10.12.2004</td> <td>Rs. 5.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 7</td> </tr> <tr> <td>8</td> <td>Agreement Regarding Advances Against Book-Debts as prime security</td> <td>10.12.2004</td> <td>Rs. 5.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 8</td> </tr> </tbody> </table>

<table border="1"> <tr> <td>9</td> <td>D.P. Note</td> <td>10.12.2004</td> <td>Rs. 5.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 9</td> </tr> <tr> <td>10</td> <td>Letter of Renewal</td> <td>07.12.2005</td> <td>Rs. 5.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 10</td> </tr> <tr> <td>11</td> <td>A.O.D.</td> <td>07.12.2005</td> <td>Rs. 5,07,637/-</td> <td>Def. No. 1 &amp; 2</td> <td>A- 11</td> </tr> <tr> <td>12</td> <td>Renewal of Credit Facilities</td> <td>07.12.2006</td> <td>Rs. 7.00</td> <td>Bank</td> <td>A- 12</td> </tr> <tr> <td>13</td> <td>D.P. Note</td> <td>18.12.2006</td> <td>Rs. 2.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 13</td> </tr> <tr> <td>14</td> <td>Letter for Renewal</td> <td>18.12.2006</td> <td>Rs. 7.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 14</td> </tr> <tr> <td>15</td> <td>Supplemental Agreement</td> <td>18.12.2006</td> <td>Rs. 7.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 15</td> </tr> <tr> <td>16</td> <td>Agreement Regarding Advances Against Book-Debts</td> <td>18.12.2006</td> <td>Rs. 7.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 16</td> </tr> <tr> <td>17</td> <td>Letter of Undertaking</td> <td>18.12.2006</td> <td>-----</td> <td>Def. No. 2</td> <td>A- 17</td> </tr> <tr> <td>18</td> <td>AOD</td> <td>18.12.2006</td> <td>Rs. 38,00,20.04</td> <td>Def. No. 1 &amp; 2</td> <td>A- 18</td> </tr> <tr> <td>19</td> <td>Link Letter for enhancement of Credit Facilities</td> <td>23.02.2008</td> <td>Rs. 10.00</td> <td>Def. No. 1 &amp; 2</td> <td>A- 19</td> </tr> <tr> <td>20</td> <td>Letter of Renewal</td> <td>23.02.2008</td> <td>Rs. 3.00</td> <td>Def. No.1 &amp; 2</td> <td>A- 20</td> </tr> <tr> <td>21</td> <td>Letter of Sanction/ Renewal of enhancement of Credit Facilities</td> <td>23.02.2008</td> <td>Rs. 10.00</td> <td>Bank</td> <td>A-21</td> </tr> <tr> <td>22</td> <td>Supplemental Agreement</td> <td>23.02.2008</td> <td>Rs. 10.00</td> <td>Def. No. 1 &amp; 2</td> <td>A-22</td> </tr> <tr> <td>23</td> <td>Agreement regarding advances against Book-Debts</td> <td>23.02.2008</td> <td>Rs. 10.00</td> <td>Def. No. 1 &amp; 2</td> <td>A-23</td> </tr> <tr> <td>24</td> <td>D.P. Note</td> <td>23.02.2008</td> <td>Rs. 3.00</td> <td>Def. No. 1 &amp; 2</td> <td>A-24</td> </tr> <tr> <td>25</td> <td>A.O.D.</td> <td>23.02.2008</td> <td>Rs. 9,91,794.51 ps.</td> <td>Def. No. 1 &amp;</td></tr></table>

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 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. 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 16.08.2010, whereas the present application has been filed on 31.12.2008. 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 S.B. Sharma, 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 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 facility, documents were executed by the defendants and facility 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. 14,24,332.54ps. with cost and further interest at the contractual rate i.e. 15.50% + 2% penal Interest per annum with monthly rests, 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, However, looking to the facts and circumstances of the case and in the interest of natural justice, the defendant deserve some leniency in the rate of interest.

So far as the dispute regarding CGTSME coverage by the Central Government is concerned. Credit Guarantee fund scheme for Micro and Small Enterprises, para 10(iv) as follows:- *"In the event of default the lending institution shall exercise its rights, if any, to take over the assets of the borrowers and the amount realized, if any, from the sale of such assets or otherwise shall first be credited in full by the lending institutions to the Trust before it claims the remaining 25% of the guaranteed amount."*

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 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."

18- Facts of the case, in my view, are well proved by evidence of the applicant bank. The applicant bank is entitled to receive it's debts with interest, from defendants, jointly and severally **Rs. 14,24,332.54ps.** alongwith pendentelite and future interest @ 10% simple per annum from 16.08.2010 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 exparte and debt is determined with costs against the defendants and it is, hereby, ordered that the applicant bank is entitled to receive it's debts with interest, from defendants, jointly and severally, amounting to **Rs. 14,24,332.54ps.** alongwith pendentelite and future interest @ 10% simple per annum from 16.08.2010 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.

Parties are directed to appear before the Recovery Officer, DRT, Allahabad on 06.04.2023. The order be communicated accordingly.

Judgment signed, sealed, dated and pronounced in the open court on this 30^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

SS