BANK OF BARODA (ERSTWHILE BANK OF BARODA HOUSINGH FINANCE LTD ) vs SHRI KASTURI LAL DEWAN on 23 August 2024

JUDGMENT

1. 1. This Transferred Application has been filed by the applicant Bank under Section 19 of the Recovery of Debts & Bankruptcy Act, 1993, against defendants for the recovery of Rs.26,44,172.00 (Rupees Twenty Six Lac, Forty Four Thousand, One Hundred and Seventy two Only) together with pendentelite and future interest, costs and other reliefs etc.

2. 2. The brief facts of the case are that the defendant Nos.1&2 are borrower and applied on 24.07.1997 for Housing loan amount of Rs.19.00 Lac for the construction of their House which was duly considered and sanctioned by the applicant-bank vide dated 31.07.1997 on certain terms and conditions as mentioned to this transferred application.

3. 3. To secure the aforesaid Housing loan facility of Rs.19.00 Lac, the defendant Nos.1,2,3&4 signed and executed various necessary security documents like Loan agreement, General Form of Guarantee by with defendant Nos.3&4, letter of Installment, Letter of cost, Power of Attorney for converting equitable mortgage in English/Simple mortgage dated 26/09/1997 and Letter of continuing Guarantee on 03.10.1997 in favor of the applicant-bank, as guarantor defendant Nos.3&4 are co-extensive, joint and several same as equal as liable to the principal borrower in respect to the due of applicant bank since first installment of the above said loan has been paid in December 1997 thereafter the defendants fails to continue their financial 3T.A.03 of 2011

discipline as the debit balance of loan account has gone upto Rs.26,44,172/- w.e.f. 01.04.2002 as mentioned to this transferred application.

4. Further in order to secure the repayment of the bank dues the defendant Nos.1,2,3&4 created the equitable mortgage of their immovable properties as collateral securities(i) 1/2 Northern portion of kothi No.62, measuring 1543 Square Yards Shivaji Road, Meerut followed by the boundaries EAST:Main Shivaji Road, Meerut WEST: Sharma Memorial Hall NORTH: Kothi Govind Madhav SOUTH: kothi Maun Pleasure by depositing the original title deed on 03.10.1997 in favor of applicant F.I. with affidavit, Which was registered in the office of Sub Registrar Meerut in additional book No.1 Vol No.2332 on pages 335/344 serial No.7444 on 24.08.1979, as mentioned to this Transferred application.

5. For availing aforesaid Housing loan facility the applicant bank opened a loan account in the name of defendant No.1.

6. After availing the aforesaid Housing loan facility, the defendants fails to maintain financial discipline and also failed to comply with the terms and conditions of loan agreement as required in the matter the applicant bank made all possible efforts through oral persuasion and through various letters etc as the defendants were reminded times to times by several applications to regularize the loan account but the defendants kept mum and have not come forward to make any efforts regarding payment of dues but the loan account of defendant remained irregular as the defendants did not care to deposit the amount to adjust/regularize the loan account despite giving various assurances, thereafter the applicant-bank issued Legal Notices dated 10.08.2001 and further again on 29.10.2001 to the defendants, requesting them to liquidate but failed as the loan account of the defendants is still un-liquidated hence, the application has been instituted and became the Transferred Application.

7. As per books of the bank maintained in the usual and ordinary course of banking business, an outstanding of Rs.26,44,172.00(Rupees Twenty Six Lac, Forty Four Thousand, One Hundred and Seventy Two Only) including interest up to 29.10.2001 were lying due for payment, for which the defendants are jointly and severally liable to repay the same, which they did not pay despite repeated requests 4T.A.03 of 2011

and demands. The applicant Bank has filed the copy of Statement of Account as mentioned to this Transferred application.

8. The cause of action for in filing of the present Transferred application arose firstly when Housing loan facility was sanctioned by the applicant bank on 24.07.1997 as the same were availed by defendants/borrowers on the execution of necessary security documents on 31.07.1997 and mortgage on 03.10.1997, the cause of action arose finally on 29.10.2001 when the applicant bank had issued sent Legal Notice to the defendants recalling the entire outstanding dues as they failed to repay the same.

9. Perusal of the records one application of LRs.3/2 of defendant No.3 filed on 09.01.2012 in r preliminary question of maintainability and executed Memorandum of Family arrangement made on 02.10.1997 distribution of properties has been mentioned i.e. property bearing No.200 Saket Meerut is allotted to defendant No.2 and property No.65 Saket, Meerut is allotted to defendant No.1, property No.54 Saket Meerut city allotted to defendant No.4 and property No.62 Shivaji Road Meerut city allotted to defendant No.3. was mortgaged to respondent with defendant No.2 is co-applicant.

10. During the pendency of the suit counsel for the applicant bank made the impleadment in para 4A that deceased borrowers defendant No.1&2 died and leave behind the the legal heirs 1/1 to 1/3 and legal heirs 2/1 to 2/6 as the legal representative of deceased have inherited all the movable and immovable properties/entire estate belong to the borrowers consequently the said representative are legally liable to pay the debts and in impleadment para 5A states that deceased borrowers defendant No.3&4 also expired and leave behind legal heirs 3/1 to 3/4 and legal heirs 4/1 to 4/5 as the legal representative of deceased borrowers have inherited all the movable and immovable properties, assets/entire estate belong to the borrowers consequently to the extent of their Share inherited said representative are legally liable to pay the debts.

11. In order dated 25.11.2022 the T.A. is place the records with connected cases. i.e. TA 473/2002, TA 385/2002 and TA 02/2011.

5T.A.03 of 2011

1. 12. The summons were served upon defendants through registered posts as well as paper publication as the defendants appears in regular hearing of the matter.

2. 13. Learned counsel for defendants appears on 02.08.2024 and prays to took the matter into consideration, application dated 23/07/2024 by Mohd. Murtza Hasan counsel of defendant No.1 is already on record.

3. 14. **Prayer allowed** therefore the matter heard against defendant No.1, on record application dated 23/07/2024 filed by Mohd. Murtza Hasan counsel of defendant No.1 along with joint and several liabilities of defendant Nos.2,3&4.

4. 15. The defendants appearing in proceedings from the record it is reflected that counsel for LR.s.1/1 to 1/3, have filed their written statement on :

5. 16. Mr. Mohd. Murtza Hasan representing the LR.s, 1/1, 1/2 and 1/3 filed his written statement and written submission stating that **LR.1/1, Smt. Raj Rani Dewan expired on 29.08.2023** As such her name is to be deleted from the array of parties further legal heir of deceased defendant No.1 have neither any connection with the borrower company M/s Dewan Rubbers industries Ltd. in any capacity what so ever nor they have executed any documents with the applicant financial institution or given any acknowledgement of any liabilities/dues of the financial institution they have not inherited any movable or immovable property of late defendant No.1, application moved after the death of defendant No.1 dated 03.03.2020 for deleting their names from the array of defendants that the late defendant No.1 has 1/5^th Share in the property 62, Shivaji Road, Meerut defendant Nos.1&2 had taken a housing loan as co- applicant in July 1997 from BOB housing finance Ltd. which was later merged with Bank of Baroda and defendant Nos.1&2 mortgaged their share in the property 62 Shivaji Road, with erstwhile BOB housing finance Ltd. for recovery of their loan BOB Housing finance Ltd. filed a civil suit in district court meerut which was transferred to this Hon'ble Tribunal and registered as T.A. No.3 of 2011 and the share of defendant No.1 in the property not devolved. As the defendant No.1 had 87400 Shares in the borrower company but neither claimed the share nor received any share and further relinquish his right nor they claim the same in future, and also the share of 7400 in Dewan Tyres Ltd, 900 Share in the name of defendant No.1(M/s Kasturi Lal & Sons HUF), share of 58800 in Dewan Steels Ltd and 3700 Share in the name of defendant No.1(M/s Kasturi Lal & Sons HUF) nor the share were came in the possession or transferred in name of defendant No.1 as such the personal guarantee of defendant No.1 would not extend to the legal heirs, it has been argued that in T.A. No.473 of 2002 this Tribunal has after considering the application of legal heirs of Kasturi Lal Dewan has exempted them from any liabilities arising out of the personal 6T.A.03 of 2011

guarantee of late Late Kasturi Lal Dewan (*para 18 of Judgment of TA 473 of 2002 order passed dated 24.04.2023*).

17. The defendant Nos.1/1 to 1/3 have also filed one application for deleting their name from the array of the defendants they also filed short written statement stating therein that after the death of defendant No.1 Kasturi Lal Dewan expired on 03.03.2020 the applicant financial institution impleaded them as legal heirs as defendant No.1/1(Smt. Raj Rani Dewan, Wife), 1/2 (Puneet Dewan, Son) and 1/3(Ritu Dewan Daughter), as the legal Heirs(i.e. 1/2, 1/3) of the deceased defendant No.1 neither have executed any documents with the applicant F.I. nor given any acknowledgment of any liabilities/dues and have not inherited property/asset of defendant No.1 He relied upon the Judgment passed by the ***Hon'ble NCLT, kolkata bench in Bank of Baroda stressed Asset management Branch Vs. Ms. Divya Jalan CP(IB) No.363/KB/2021*** where in the Hon'ble court it has been argued that in T.A. No.473 of 2002 this Tribunal has after considering the application of legal heirs of late Kasturi Lal Dewan has exempted them from any liabilities (*para 18 of Judgment of TA 473 of 2002 order passed dated 24.04.2023*).

18. Counsel for the LRs Nos.1/1 to 1/3 stated that the legal heir of the late defendant No.1 i.e. Smt.Raj Rani Dewan(wife), Shri Puneet Dewan(son) and Smt. Ritu Dewan (daughter) are not liable for any dues of the applicant-financial institution as they have not inherited any of the property/assets of defendant No.1 i.e. Late Kasturi Lal Dewan The share of defendant No.1 are not in the possession of them nor it has been transferred in their names, they stated that the said defendants will not claim any right over the share and properties mortgaged with the bank in future and they hereby relinquish their right if any, in the aforesaid Shares of the company. The right of recovery of debt from the legal heirs of the defendant No.1 arises only to the extent of assets they have inherited from the deceased, but they have not inherited any assets what so ever hence T.A. may be dismissed against the legal heir of defendant No.1.

19. Further in the amendment incorporated vide order dated 23/03/2009 that after the filing 7 in suit amalgamation scheme has been brought up by Bank of Baroda 7T.A.03 of 2011

Housing Finance Ltd. for merger in the Bank of Baroda, according to the banking companies (Acquisition and transfer of Undertaking) Act, 1970 in the related T.A.02-2011 Bank of Baroda V/s M/s Dewan Rubber Industries was filed together defendants were arrayed as parties in subject to the recovery

20. In support of the case, Shri R.N. Malhotra Chief Manager of the applicant Bank affidavit and Sri Rajeev Garg affidavit is found on record.

21. On a careful scrutiny of the evidence on affidavit and marking to this transferred application, it is proved that defendants had availed the abovementioned open above credit facility from the applicant bank by executing loan and security documents detailed as above in favour of the applicant-Bank. A perusal of the application, evidence and documents relied upon clearly shows that defendants had utilized the above Credit loan facility granted to them. The applicant-bank had maintained the Books of account in the ordinary course of banking business showing disbursement of the loan amount. It further shows that bank had regularly credited the amount paid by the defendants in the books of account. The Bank had also charged interest from time to time and the entries are relevant u/s 4 of the Bankers Books of Evidence Act. It is also proved that the applicant bank's claim is within limitation against the defendants.

22. It is pertinent to mention here that the defendant Nos.1,2,3&4 are died leave behind their legal heirs who have been substituted and arrayed as defendants to this transferred application.

23. From the perusal of records defendant No.3/1 to 3/4 filed his written statement dated 09.01.2012 raising preliminary question of maintainability of the T.A. and on impleadment of the legal heirs was not moved the stipulated time as such the suit stand abated as against LRs. 3/1 to 3/4 objection not disposed off and the property in question by six persons late Daulat Ram Dewan , defendant Nos.1,2,3,4 and Balwant Rai Dewan however its remained in exclusive possession of defendant No.3 as the sale deed was mortgaged on 20.07.1979 by defendant Nos.3&4 as admitted that the property in question is in share of 6 persons alleged mortgaged is defective therefore the suit is highly time barred and memorandum of 8T.A.03 of 2011

family arrangement executed and the defendant No.1/1 to 1/3, 2/1 to 2/6, 3/1 to 3/4 and 4/1 to 4/5 have file their respective written statement and application substituted legal heirs and arrayed as defendants in place of "*deceased*" borrower.

24. On the other hand several application, written statement filed on record of LRs 1/1 to 1/3 and in their respectively request for deleting the name of LRs.1/1 Smt. Raj Rani as expired on 29.08.2023 on the ground that they have not inherited any assets and properties from defendant No.1 to the extent of legal heirs, legal heir of defendant No.1 have relinquished their right in the share of the company had produced the documents, bank accounts and categorically stated that they have not inherited any kind of fixed and liquid assets from defendant No.1 Which provide liberty to the bank to recover the dues from the share of defendant No.1 as the LRs 1/1, 1/2 & 1/3 have no objection, considering the undertaking and submission of relinquishment given by defendant Nos.1/1 to 1/3 the T.A. against the defendant Nos.1/1 to 1/3 is dismissed with the observation that they will not be able to raise any objection in future at the time of execution of the recovery certificate.

25. Pegasus Assets Reconstruction Put Ltd. had filed an application Dated 05/12/2018 as an intervenor wherein it has been stated that the bank of Baroda had sold out the plants and Machinery on 14/01/2011 and land of building on 02/02/2011 of the borrower company for Rs.306 Lac and Rs.1655 Lac Respectively, further the bank is keeping Sale proceeds of a Sale of Rs.1.68 Crore since 2014.

Be that as It May the entire accept of Money Received by the bank as per the consortium be distributed to its members.

26. Accordingly, the defendants are directed to pay the balance dues to the applicant bank within a period of 2 months from the date of judgment failing which the applicant bank will be entitled to sell the personal assets/properties of defendants.

27. The applicant-bank has claimed interest @17.00% together with pendentelite and future interest per annum in the loan accounts till the date of its realization and costs. The contest between the applicant-bank and the defendants comes to an end and after filing of the T.A. as per the provisions of Section 19(2) of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time) which is analogous 9T.A.03 of 2011

to Section 34 to the CPC, the Tribunal/Court has direction in awarding pendente lite and future interest. I am also supported in my vide by 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 pendete-lite and future interest is granted @12.00% per annum in the loan account with monthly rate on reducing balance from the date of filing of the T.A. till the date of realization with costs.

28. In the result, the Transferred Application succeeds dismissed against defendant No.1 and on contest against the defendant Nos.2,3&4 with costs, The bank has proved the loan execution of security loan documents in favour of the bank, the defendants are liable to pay the dues of the bank and hypothecated assets /mortgaged properties as well as personal properties of defendants are liable to be sold.

29. It is, therefore, **ordered**:-

1. (i) That the **Transferred Application No.03 of 2011** of the applicant bank for issuance of Recovery Certificate to the tune of Rs.26,44,172.00 (Rupees Twenty Six Lac, Forty Four Thousand, One Hundred and Seventy Two Only) together with pendente lite and future interest @12.00% per annum with monthly rest from the date of filing of the Transferred Application i.e.20.01.2011 till the loan is fully liquidated with costs succeeds is hereby allowed on contest against defendant Nos.2,3&4 jointly and severally with legal heirs.

2. (ii) The defendants are directed to pay the dues within a period of two months from the date of judgment, failing which the applicant bank will be entitled to recover the same from the personal movables and immovable assets of the defendants with legal heirs.

3. (iii) The applicant-Bank is entitled to recover aforesaid amount by the sale of Mortgaged properties/Hypothecations (If not sold earlier under the provisions of the S.A.R.F.A.E.S.I. Act, 2002) the, amount, if any recovered by sale of mortgaged properties/hypothecated assets or otherwise shall be adjusted towards the debt and only the balance 10T.A.03 of 2011

amount shall be recoverable. If the dues of the applicant bank still remain unsatisfied, the same be recovered by the attachment and sale of the personal movable and immovable assets of the defendants Nos.2,3&4 jointly and severally.

(iv) The defendant Nos.1/1 i.e. Smt Raj Rani Dewan (as expired on 29.08.2023 ), 1/2 Mr. Puneet Dewan and 1/3 Smt. Ritu Dewan, the legal heirs of the defendant No.1 is hereby exonerated from the liability of the applicant financial institution and T.A. is dismissed against them as they have not inherited and got any movable/immovable property/assets of defendant No.1 i.e. Kasturi Lal Dewan and the legal heirs will not raised any objection in future at the time of execution of the recovery certificate If the applicant F.I. sell any of the properties/assets of late defendant No.1.

(v) The defendant Nos.2,3&4 are hereby restrained by means of injunction from depleting, transferring, encumbering, alienating or in any way dealing with their properties/estates without first paying the claim of the applicant bank.

(vi) Let Recovery Certificate be issued immediately u/s 19(22) of the Recovery of Debts and Bankruptcy Act, 1993 by fixing 23.11.2024, before R.O., DRT, Lucknow.

(vii) The applicant bank is directed to file a memo of cost for preparing Recovery Certificate u/s 19(22) of the Recovery of Debts & Bankruptcy Act, 1993.

Judgment is pronounced in the open court.

Dated: 23.08.2024

(A.H. Khan) Presiding Officer

(sg)