PUNJAB AND SIND BANK vs DHARMVEER on 4 September 2019

**J U D G M E N T**

1. 1. Applicant Bank had filed this Original Application on 26.10.2016 under section 19(1) of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time) against the Defendant in DRT Lucknow for recovery of Rs.13,94,697/- (Rupees Thirteen Lac, Ninety Four Thousand, Six Hundred Ninety Seven only) alongwith pendent-lite and future interest @13.55% per annum with monthly rests plus penal interest @2.00% per annum from 16.10.2016 till the date of realization and costs.

2. 2. The brief facts of case are that that the Defendant is principal borrower. The Defendant being principal borrower approached Applicant Bank for grant of financial assistance in the shape of

Credit Facility of Rs.9.50 Lac and submitted loan application. Applicant Bank after considering the loan application on 04.03.2011 sanctioned a Term Loan of Rs. 2.50 Lac & Cash Credit Limit of Rs. 7.00 Lac for Business Purpose to the Defendant against primary security of hypothecation of goods, consumable stores, plant & machinery & spares under PMEGP Scheme in favour of Applicant Bank. The Defendant executed and signed various loan and security documents on 10.03.2011 in favour of Applicant Bank. The rate of interest was agreed between the parties @ 13.30% per annum with monthly rests subject to change from time to time as per RBI Guidelines.

1. 3. However, after availing the aforesaid Loan facility the Defendant failed to maintain financial discipline as per terms and conditions of the loan agreement due to which loan account became irregular. Despite repeated reminders and persuasion, the Defendant failed to regularize the loan account. Consequently, the said account of the Defendant was classified as NPA on 28.09.2012 and recalled by Applicant Bank. Thereafter, Applicant Bank served Demand Notice to the Defendants to repay the outstanding dues but the Defendant failed to make the payment of outstanding dues. Hence, the present Original Application has been filed by Applicant Bank against Defendants for recovery of Rs.13,94,697/- (Rupees-Thirteen Lac Ninety Four Thousand Six Hundred Ninety Seven only) alongwith pende-lite, future interest, costs and for issuance of Recovery Certificate for the said amount.

2. 4. The averments of Applicant Bank are set out in detail in its Original Application which is supported by affidavit. Therefore, these are not being stated here afresh to avoid a repetition of facts.

1. 5. The summons were issued to the Defendant. Despite service, none appeared for the Defendant. Hence, the Defendant was proceeded ex-parte.

2. 6. Applicant Bank filed its evidence by way of affidavit of Sh. Kuldeepak Kaul, Chief Manager of Applicant Bank as AW-1/1 who proved the various loan and security documents which are marked as Exhibit- AW-1/1 to Exhibit- AW-1/16.

3. 7. I have heard the ex-parte arguments of Ld. Counsel for Applicant Bank and perused the material on record.

4. 8. The point for consideration is whether Applicant Bank is entitled to recover the claim as prayed for?

5. 9. Section 17(1) of the RDB Act of 1993 vests a Tribunal constituted under the Act with the jurisdiction, powers and authority to entertain and decide applications from the Banks and Financial Institutions for recovery of debts due to such Banks and Financial Institutions. 'Debt' is, defined in Section 2(g) of the Act, 1993. The RDB Act, 1993 creates a complete code for the adjudication of matters referred to in Section 17 and provides for the procedure in respect thereof. The jurisdiction of the Civil Courts to try cases in respect of recovery debts of Rs.10.00 Lac and above due to Banks and financial institutions was stands ousted by the Act. Hence, Original Application filed U/s 19(1) of the Recovery of Debts and Bankruptcy Act, 1993 is within the jurisdiction and legally maintainable before this Tribunal.

6. 10. Further, Applicant Bank has fully corroborated the averments made in the O.A. against the Defendants through evidence of witness Sh. Kuldeepak Kaul, Chief Manager of Applicant Bank as AW-1/1. The Applicant Bank has also established its case through documentary evidence being Exhibit- AW-1/1 to Exhibit- AW-1/16. On a careful scrutiny of the evidence on affidavit and exhibits marked as Exhibit- AW-1/1 to Exhibit- AW-1/16, it is proved that Defendant had availed the Cash Credit Limit & Term Loan facility from the Applicant Bank against primary security of hypothecation of goods, consumable stores, plant & machinery & spares in favour of the Applicant Bank. A perusal of Original Application, evidence and documents relied upon clearly show that Defendant had utilized the above loan facility as granted to him.

1. 11. However, after availing the aforesaid Term Loan (Vehicle), facility, Defendant failed to maintain financial discipline as per terms and conditions of the loan agreement. Consequently, the said account was rightly classified as NPA on 28.09.2012 and recalled by Applicant Bank. Thereafter, Applicant Bank served final Legal Notice dated 27.09.2016 Exhibit- AW-1/15 to the Defendants to repay the outstanding dues but the Defendants failed to make the payment of outstanding dues. The whole case of the Applicant Bank is based on documentary evidence and the witness has duly proved all these documents. In my view there is no question of disbelieving the evidence lead by the Applicant Bank and Applicant Bank has proved its case beyond reasonable doubts.

2. 12. Further, on perusal of Exhibits AW-1/16 show that Applicant Bank has maintained the Books of account in the ordinary course of banking business showing disbursement of the loan amounts as per provisions of Bankers Books Evidence Act, 1891 and Guidelines of RBI under Banking Regulation Act, 1949. It further shows that Applicant Bank had regularly credited the amount if any, paid by the defendant in the books of account. Applicant Bank had also charged interest from

IN THE DEBTS RECOVERY TRIBUNAL, ALLAHABAD

time to time and the entries are relevant U/s 4 of the Bankers Books Evidence Act, 1891 as reflected from A/c Statements attached with O.A. Exhibits AW-1/16.

1. 13. Moreover, Applicant Bank has been able to prove that the Defendant No.1 availed the Term Loan & Cash Credit Limit Facility and failed to repay the same in terms of loan documents. Since, the transactions are of commercial nature between the parties, the Defendant are bound to repay the loan amount with interest as agreed upon and Applicant Bank is entitled to recover suit amount with interest as claimed by it. The Original Application has been presented on 20.10.2016 i.e. within three years from the date of last deposit being made on 18.01.2014 admitting debt liability for the purpose of limitation as reflected from Account Statement Exhibit AW-1/16. Thus, it is proved that the Defendant is liable to pay the claim made in the O.A. to the Applicant Bank.

2. 14. Applicant Bank has claimed interest @13.55% per annum with monthly rests plus penal interest @2.00% Per annum from 16.10.2016 till the date of realization and costs. The contract between Applicant Bank and the Defendants comes to an end and after filing of the O.A. as per the provisions of Section 19(20) of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time) which is analogous to Section 34 of the CPC, the Tribunal/Court has discretion in awarding pendentite-lite and future interest. I am also supported in my view by the **Hon'ble Supreme Court** in a case titled ***Central Bank of India Vs. Ravindra and others reported in AIR 2001 SC page 3095***. On the basis of the foregoing discussion, interest of justice will be served if pendentite-lite and future interest is granted @12% per annum simple rate on reducing balance from the date of filing of the O.A. till the date of realization with costs.

15. In the light of above discussion, the Original Application deserves to be allowed against the Defendants with costs.

**ORDER**

- (i) The Original Application is allowed declaring that the Defendant is liable to pay a total sum of Rs.13,94,697/- (Rupees Thirteen Lac, Ninety Four Thousand, Six Hundred Ninety Seven only) to Applicant Bank alongwith pendentite-lite and future interest @ 12% per annum simple rate of interest on reducing balance from the date of filing of the O.A. i.e. 26.10.2016 till the date of realization with costs.

- (ii) Applicant Bank is entitled to recover aforesaid amount by sale of hypothecated assets. 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.

- (iii) Applicant Bank is at liberty to enforce the claim through due process of law.

- (iv) Any other application pending stands disposed of.

- (v) Recovery Certificate be issued forthwith in above terms U/s 19(22) of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time) and be sent to the Recovery Officer, DRT, Allahabad for execution.

- (vi) Applicant Bank is directed to file revised statement of account before the Recovery Officer of the Tribunal.

(Jurisdiction - Part of Uttar Pradesh)

Parties are directed to appear before the Recovery Officer, DRT, Allahabad on 11.11.2019.

- (vii) The Defendant is hereby restrained by means of injunction from depleting, transferring, encumbering, alienating, selling or otherwise dealing with his properties/estates without first paying the above claim of Applicant Bank

- (viii) In case, the Defendant expire, the legal representatives shall be liable to pay in proportion to the inheritance.

- (ix) Copy of this Judgment and Recovery Certificate be given Dasti to Applicant Bank and be sent to the Defendant free of cost by Registered Post in terms of section 19(21) (i) of the RDB Act, 1993 (as amended from time to time) and Rules as well as to the Recovery Officer and after due compliance, file be consigned to record room.

16. Applicant Bank is directed to file a Memo of Cost, if not filed earlier, for preparing Recovery Certificate U/s 19(22) of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time).

Judgment pronounced in the open court on this 04^th Day of September, 2019.

(SHAMMI KHAN) Presiding Officer, DRT, Allahabad Additional Charge

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