CANARA BANK vs M/S AMAR BOOK AND COPY HOUSE on 14 July 2022

**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 31.01.2017, against the defendants to recover its debts from defendants of Rs. 28,74,507.00 alongwith pendentelite and future interest @ 10.75% plus 2 % penal interest per annum with monthly rest from 04.12.2016 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 body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, V of 1970, having its Head Office at J.C. Road, Bangalore, and having among others a Branch Office at Atrauli, District – Aligarh through the Senior Manager/ Principal Officer & Constituted Attorney.

The facts of the case as contained in its application are that Megh Singh S/o Naval Singh was the borrower in OCC Account and Term Loan Account, which was granted to him for purchase of machinery items to start manufacturing of copy and offset printings works. The borrower was died on 22.04.2016 having left his wife Prabha Devi as his legal heir. Hence being the wife and legal heir of the borrower, she is liable to repay the said entire dues of defendant no. 1, which had been taken by the borrower from the applicant bank.. The defendant No. 1 through borrower Megh Singh approached the applicant bank to get sanction financial assistance in the shape of OCC and Term Loan Facilities to augment its business. The applicant bank after considering the proposal and worth of the security offered; sanctioned an OCC Facility of Rs. 18.00 lakhs and Term Loan of Rs. 9.50 Lacs on 12.02.2014 under CGTSME Scheme. In consideration thereof and in order to avail the above sanctioned Credit facilities, the borrower has executed Bank's standard loan documents on 12.02.2014 and 27.02.2014. The Term Loan was repayable in 60 equated monthly installments. The agreed rate of interests in both the accounts was @ 11.45% per annum with monthly rests.

To secure the aforesaid credit facility defendants hypothecated stocks and assets and vehicle in favour of the applicant bank on 27.02.2014.

The defendant No. 1 and **borrower** availed the Term Loan and OCC 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 & **Borrower** became irregular and sticky and were declared NPA on 29.04.2016. The applicant Bank sent Legal notice on 30.11.2016 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 no. 2 on behalf of defendant no. 1. Accordingly the applicant bank has moved this O.A./T.A. to recover public money.

The total outstanding due in both the accounts comes to Rs. 28,74,507.00 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 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 10.01.2022 in "Dainik Jagaran", 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 12.05.2022.

5- To prove its case, the applicant Bank has referred attested copies of various documents before this Tribunal on 31.01.2017. The applicant bank has also given evidence on affidavit by way of affidavit of Shri Affaque Ul Haque, 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>Application for Loans</td> <td>12.02.2014</td> <td>.....</td> <td>Def. 1 &amp; 2</td> <td>A- 1</td> </tr> <tr> <td>2</td> <td>Particulars of vehicle /hypothecated stock</td> <td>27.02.2014</td> <td>9.50</td> <td>Def. 1 &amp; 2</td> <td>A- 2</td> </tr> <tr> <td>3</td> <td>Sanction Letter</td> <td>12.02.2014</td> <td>9.50<br/>18.00</td> <td>Def. 1 &amp; 2</td> <td>A- 3</td> </tr> <tr> <td>4</td> <td>Certificate of Registration</td> <td>09.01.2014</td> <td>....</td> <td>Def. 1 &amp; 2</td> <td>A- 4</td> </tr> <tr> <td>5</td> <td>Memorandum for manufacturing enterprises</td> <td>28.01.2014</td> <td>....</td> <td>Def. 1 &amp; 2</td> <td>A- 5</td> </tr> <tr> <td>6</td> <td>Pronote</td> <td>13.02.2014</td> <td>18.00</td> <td>Def. 1 &amp; 2</td> <td>A- 6</td> </tr> <tr> <td>7</td> <td>Request of Overdraft Facility</td> <td>13.02.2014</td> <td>18.00</td> <td>Def. 1 &amp; 2</td> <td>A- 7</td> </tr> <tr> <td>8</td> <td>Cash Credit Agreement</td> <td>13.02.2014</td> <td>18.00</td> <td>Def. 1 &amp; 2</td> <td>A- 8</td> </tr> <tr> <td>9</td> <td>Deed of Hypothecation of vehicle</td> <td>13.02.2014</td> <td>....</td> <td>Def. 1 &amp; 2</td> <td>A- 9</td> </tr> <tr> <td>10</td> <td>Agreement cum deed of hypothecation</td> <td>13.02.2014</td> <td>9.50</td> <td>Def. 1 &amp; 2</td> <td>A- 10</td> </tr> <tr> <td>11</td> <td>Letter of Undertaking</td> <td>13.02.2014</td> <td>...</td> <td>Def. 1 &amp; 2</td> <td>A- 11</td> </tr> <tr> <td>12</td> <td>Accounting Opening Form for saving bank /current account</td> <td>...</td> <td>...</td> <td>...</td> <td>A- 12</td> </tr> <tr> <td>13</td> <td>Legal Notice</td> <td>30.11.2016</td> <td>....</td> <td>Bank</td> <td>A- 13</td> </tr> <tr> <td>14</td> <td>Statement of Accounts.</td> <td>....</td> <td>....</td> <td>Bank</td> <td>A- 14</td> </tr> </tbody> </table>

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 29.04.2016, whereas the present application has been filed on 31.01.2017. 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 Affaque Ul Haque , 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 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. 28,74,507.00 with cost and further interest @ 10.75% plus 2 % penal interest per annum with monthly rest from 04.12.2016 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, 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.

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 realised, 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 per cent 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 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 from defendants, jointly and severally Rs. 28,74,507.00 alongwith pendentelite and future interest @ 10% simple per annum from 04.12.2016 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 exparte and debt is determined with costs against the defendants and it is, hereby, ordered that the applicant bank is entitled to receive from defendants, jointly and severally, it's debts with interest, amounting to Rs. 28,74,507.00 alongwith pendentelite and future interest @ 10% simple per annum from 04.12.2016 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 /vehicle of the Defendants in execution proceedings*. *The amount, if any, already recovered by sale of any hypothecated assets /vehicle 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/ vehicle 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 18.09.2022. The order be communicated accordingly.

Judgment signed, sealed, dated and pronounced in the open court on this 14^th Day of July, 2022.

Dictated & Corrected by me.

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

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