STATE BANK OF INDIA vs M S SAI COPPER WIRE PRIVATE LTD AND ORS on 11 March 2022

1. 1. **M/s Sai Copper Wire Pvt. Ltd.**, having its registered office at 2, India Exchange Place (Near Tea Board), 01^st Floor, Room No.11, Kolkata – 700001.

2. 2. **Sri Dev Anand Gupta**, son of Rajput Gupta, residing at Flat No.8 J, 08^th Floor, Diamond Enclave, 113, Diamond Harbour Road, Kolkata – 700034, and at 2, India Exchange Place (Near Tea Board), 01^st Floor, Room No.11, Kolkata – 700001.

3. 3. **Ms. Aarti Gupta**, wife of Sri Dev Anand Gupta, residing at Flat No.8 J, 08^th Floor, Diamond Enclave, 113, Diamond Harbour Road, Kolkata – 700034, and at 2, India Exchange Place (Near Tea Board), 01^st Floor, Room No.11, Kolkata – 700001.

..... Defendants

Counsel for parties:

<table border="0"> <tr> <td>For the Applicant Bank</td> <td>: Mr. Anirban Pramanick</td> </tr> <tr> <td>For the Defendants</td> <td>: <i>Ex parte</i>.</td> </tr> </table>

**FINAL ORDER / JUDGMENT** Delivered on 11.03.2022

The Applicant, State Bank of India, tendered this Application, being O.A. No.52 of 2018 on 19.01.2018 filed in DRT-3, Kolkata against three defendants under Section 19 of the Recovery of Debts & Bankruptcy Act, 1993 (amended from time to time) for recovery of a sum of Rs.47,63,652.00 (Rupees forty seven lakhs sixty three thousand six hundred fifty two) is due and payable as on 16.11.2017 and further interest @ 18% per annum from 17.11.2017, till realization in full and costs etc. Subsequently, the instant case has been transferred to DRT-2, Kolkata vide the Hon'ble Chairperson DRAT, Kolkata's direction vide letter No.4/6/DRAT/KOL/2018(pt.) dated 16.09.2019, TA/12 of 2019/DRT-2

Chairperson DRAT, Kolkata's direction vide letter No.4/6/DRAT/KOL/2018(pt.) dated 16.09.2019, such has been recorded in Ld. Registrar, Kolkata DRT-3's Order dated 15.10.2019 and the same has been renumbered as T.A./ 12 of 2019 vide Ld. Registrar's order dated 24.10.2019.

2. The brief facts of the case as set out by the Applicant Bank in its Original Application, as under:

(i) The defendant No.1 is the company. The defendants No.2 & 3 are the directors and the guarantors of the loan account.

(ii) The defendant No.1 through its directors had approached and applied to State Bank of Bikaner & Jaipur's Jodhpur Park Branch, Kolkata on 13.03.2014 which has now merged into State Bank of India as per Gazette of India Notification dated 22.02.2017 for cash credit facility of Rs.10,00,000/-; upon consideration of application, applicant Bank was pleased to grant / sanction a cash credit limit of Rs.10,00,000.- (Rupees ten lakhs) to the defendant No.1 company, vide Letter of Arrangement dated 09.04.2014, copy of letter of Arrangement is annexed and marked as Annexure 'A'. At the relevant point of time, the rate of interest was @ 13% per annum and the primary security of the said sanction was the hypothecation of stocks and book debts.

(iii) In respect of the said cash credit facility of Rs.10.00 lakhs, the defendants had executed the following security documents in favour of applicant Bank:

(a) Agreement of Loan-cum-Hypothecation dated 09.04.2014 for Rs.10,00,000/- Copy of said document is annexed and marked as Annexure 'B'.

(iv) To secure the said cash credit granted to the defendant No.1, the defendants No.2 & 3 guaranteed the due payment of all present and future indebtedness and liabilities of the defendants to the applicant Bank by executing a 'Guarantee Agreement' dated 09.04.2014 for Rs.10,00,000/-, and stated that the said guarantee is a continuing guarantee. Copy of the same is annexed and marked as Annexure 'C'.

(v) Again, the defendant No.1 through its directors had applied to the applicant Bank on 20.08.2015 for enhancement of existing cash credit facility aggregating to a sum of Rs.40,00,000/-; upon replying on the application, the applicant Bank was pleased to enhance the existing cash credit limit from Rs.10.00 lakhs to Rs.40,00,000/- (Rupees forty lakhs) to the defendant No.1 vide Letter of Arrangement dated 09.09.2015; copy of letter of Arrangement is annexed and marked as Annexure 'D'. At the relevant point of time, the rate of interest was @ 13.20% per annum and the primary security of the said enhanced sanction was the hypothecation of stocks and book debts and third party guarantors of the defendants No.2 & 3. The defendants had also passed a board resolution on 02.04.2015; copy of board resolution is annexed and marked as Annexure 'E'.

(vi) In respect of the said enhanced cash credit facility of Rs.40.00 lakhs, the defendants had executed the following security documents in favour of applicant Bank:

(a) Agreement of Loan-cum-Hypothecation dated 09.09.2015 for Rs.40,00,000/- Copy of said document is annexed and marked as Annexure 'F'.

(vii) To secure the said enhanced cash credit facility of Rs.40.00 lakhs granted to the defendant No.1, the defendants No.2 & 3 guaranteed the due payment of all present and future indebtedness and liabilities of the defendants to the applicant Bank by executing a 'Guarantee Agreement' dated 09.09.2015 for Rs.40,00,000/-, and stated that the said guarantee is a continuing guarantee. Copy of the same is annexed and marked as Annexure 'G'.

(viii) Again, the defendant No.1 through its directors had approached and applied before State Bank of Bikaner & Jaipur on 08.02.2016 for another cash credit (SLC) facility aggregating to a sum of Rs.6,00,000/-; upon considering the application, the applicant bank was pleased to grant / sanction a cash credit (SLC) facility for a sum of Rs.6,00,000/- (Rupees six lakhs) to defendant No.1 vide Letter of Arrangement dated 08.02.2016; copy of said letter of Arrangement is annexed and marked as Annexure 'H'. At the sanction of cash credit (SLC) facility of Rs.6.00 lakhs, the effective rate of interest was @ 14.05% per annum with monthly rests and the primary security of the said sanction was the hypothecation of stocks and book debts and third party guarantors of the defendants No.2 & 3.

(ix) In consideration of the said cash credit (SLC) facility of Rs.6.00 lakhs, the defendants had executed the following security documents in favour of applicant Bank:

- (a) Supplemental Agreement of Loan-cum-Hypothecation dated 08.02.2016; and

- (b) Link Letter.

Copy of said documents are annexed and marked as Annexure 'I' & 'J' respectively.

(x) To secure the said cash credit (SLC) facility of Rs.6.00 lakhs granted to the defendant No.1, the defendants No.2 & 3 guaranteed the due payment of all present and future indebtedness and liabilities of the defendants to the applicant Bank by executing a 'Guarantee Agreement' dated 08.02.2016 for Rs.6,00,000/-, and stated that the said guarantee is a continuing guarantee. Copy of the same is annexed and marked as Annexure 'K'.

(xi) For the purpose of securing the repayment of such loans / advances made to the defendants, the defendant No.2 created equitable mortgage in respect of his immovable property(s), described in 'Particulars of the mortgaged Property' at page 12 & 20 of the O.A., being Dag Nos.3803 & 3801 under Mouza - Nibra, Sub-Registry Office - Domjur by depositing Title Deeds with the applicant Bank. To that effect, the defendant No.2 submitted letters dated 01.09.2014 & 09.09.2015 respectively confirming deposit of title deeds in favour of applicant Bank; copies of such letters confirming deposit of title deed are annexed and marked as Annexure 'L' & 'N' respectively. Copies of Deed(s) of Conveyance being No.04171 & No.11138 for the year 2009 and for the year 2005 respectively and copy of valuation report dated 07.04.2015 are annexed and marked as 'M', 'O' & 'P' respectively.

3. The Defendants enjoyed the aforesaid credit facilities by opening Accounts in Defendant No.1's name (M/s Sai Copper Wire Pvt. Ltd.) in Applicant Bank's Jodhpur Park Branch, Kolkata represented by SARB, South Bengal, Jeevan Deep Bldg., Kolkata - 700071. However, the defendants failed and neglected to abide by the terms and conditions of the facilities. The 4TA/12 of 2019/DRT-2)

Defendants did not repay the outstanding Bank's dues and overdue interests in the loan Accounts. In spite of several reminders and requests made by the Bank, the defendants failed to regularize the loan Accounts. Since the defendants did not pay any attention to regularize the Account(s), the Accounts became irregular and was classified as N.P.A. on 28.08.2016. There is not other alternatives, applicant Bank was compelled to issue a legal Notice dated 11.09.2017 upon the Defendants through its Advocate that has been duly received by the defendants demanding payment of outstanding loan amount, but the defendants did not comply the Notice, copy of said Notice along with postal receipts are annexed and marked as Annexure 'Q'. Thereafter, the applicant Bank issued another legal Notice dated 09.12.2017 upon the defendants / borrower(s) through its Advocate and such Notice has been received by the defendants, calling upon them to repay the outstanding Bank's dues for a sum of Rs.47,63,652/- as on 16.11.2017, but the defendants failed and neglected to pay the outstanding loan amounts; copy of Advocate's letter dated 09.12.2017 along with postal receipts and acknowledgement due cards are annexed and marked as Annexure 'R'. Certified copies of Statements of Accounts along with Certificate under Bankers' Books Evidence Act, with Interest calculation sheet, have been filed to show and prove the dues (Annexure 'S'), and further interest @ 18% per annum, till realization, has been prayed. Applicant Bank submitted that their claim in the Application is within limitation.

4. The Notices / summons were sent to the Defendants No.1, 2 & 3 by the Tribunal; service of Notices / summons upon the Defendant No.1 has been successfully effected and the summons has not been successfully delivered upon the defendants No.2 & 3; however, Ld. Advocate appeared on behalf of all the defendants on 21.01.2021 by filing vakalatnama, such has been recorded vide Ld. Registrar's order dated 21.01.2021. An I.A. being I.A./618 of 2021 dated 24.06.2021 praying for appoint a receiver for the purpose of making inventory and for the purpose of taking physical possession of the mortgaged property; the said I.A. was dismissed vide order dated 11.08.2021 with the direction to file fresh application disclosing the facts, and defendants were directed to approach the applicant Bank with a concrete compromise proposal and also granted liberty to file the outcome of the settlement. However, despite service and granted opportunity, the defendants did not file the written statement; hence, right to file the written statement on behalf of defendants was closed vide order dated 11.08.2021. Another I.A. being I.A./1311 of 2021 dated 18.11.2021 has been filed by the applicant Bank for early disposal of the instant T.A.; the said I.A./1311/2021 has been disposed of vide order dated 08.12.2021. Ld. Counsel for applicant Bank has submitted arguments on 08.12.2021.

5. Applicant Bank has filed the evidence-on-affidavit affirmed by Mr. Swapan Kumar Banerjee, City Case Officer of Applicant Bank's Stressed Assets Recovery Branch (SARB), South Bengal, Jeevan Deep Bldg., 1, Middleton Street, Kolkata – 700071 along with the original documents executed by the Defendants. Original documents have been produced by the Applicant Bank; the same have been verified with the true certified copies of documents annexed with O.A. and the original documents have been returned to Shri Subrata Barman, Deputy Manager – C.C.O., Stressed Assets Recovery Branch (SARB), South Bengal, Jeevan Deep Bldg., 1, Middleton Street, Kolkata –

700071 on 05.11.2019, such has been recorded in Ld. Registrar's order dated 05.11.2019. The documents produced by the Applicant Bank are exhibited and annexed at Exhibit 'AW-1' to 'AW-19'.

I have heard the Ld. Counsel for the Applicant Bank and perused the records.

6. Evidence-on-affidavit filed by the Applicant Bank is supported by the copies of documents (original documents verified by the Registry and returned to Shri Subrata Barman, Deputy Manager – C.C.O., Stressed Assets Recovery Branch (SARB), South Bengal, Jeevan Deep Bldg., 1, Middleton Street, Kolkata – 700071 on 05.11.2019). Applicant Bank has corroborated the averments made in the T.A./12 of 2019 (arising out of O.A./52 of 2018 – DRT-3/Kol). Applicant Bank has proved the sanction of enhanced cash credit facility of Rs.40,00,000/- and sanction of cash credit (SLC) facility of Rs.6,00,000/-.

Applicant Bank has proved the mortgaged immovable property(s) remain as mortgaged, described in 'Particulars of the Mortgage Property' at Page 12 & 20 of the T.A./O.A. The defendant No.2 has confirmed the creation of mortgage by deposit of title deed(s) by delivering letters dated 01.09.2014 & 09.09.2015 in favour of applicant Bank.

7. Evidence-on-affidavit, filed by the Applicant Bank, has remained unchallenged, un-rebutted and its veracity cannot be put to dispute. Applicant Bank has proved the averments made in the original Application.

8. Applicant Bank has filed Statements of Accounts certified under Banker's Books Evidence Act. Applicant Bank has stated that the outstanding balance in Loan Accounts as under:

Cash Credit Account No.61218028471:

<table> <tbody> <tr> <td>Outstanding balance as on 16.11.2017<br/>(Interest calculated upto 28.08.2016)<br/>Unapplied interest from 29.08.2016<br/>to 16.11.2017)</td> <td>: Rs.39,98,586.02<br/><br/>: Rs. 96,251.98</td> <td>Rs.41,46,866.00</td> </tr> </tbody> </table>

Cash Credit (SLC) Account No.61306566408:

<table> <tbody> <tr> <td>Outstanding balance as on 16.11.2017<br/>(Interest calculated upto 28.08.2016)<br/>Unapplied interest from 29.08.2016<br/>to 16.11.2017)</td> <td>: Rs. 5,98,817.25<br/><br/>: Rs. 11,512.75</td> <td></td> </tr> <tr> <td>Add : Penal Interest</td> <td>Rs. 6,456.00</td> <td></td> </tr> <tr> <td></td> <td></td> <td>Rs. 6,16,786.00</td> </tr> <tr> <td>Total :</td> <td></td> <td><b>Rs.47,63,652.00</b></td> </tr> </tbody> </table>

(Rupees forty seven lakhs sixty three thousand six hundred fifty two) as on 16.11.2017, which is the amount claimed by the applicant Bank in the original Application, and the defendants No.1, 2 & 3 are, jointly and/or severally, liable to repay the said amount to the applicant Bank with *pendente lite* and future interest, till realization. Applicant Bank has prayed future interest @ 18% per annum, while in the Letter of Arrangement dated 09.04.2014 the rate of interest @ 13% per annum and Letter of Arrangement dated 08.02.2016 the rate of interest @ 15.05% per annum, have been mentioned. Therefore, in my view, the *pendente lite* & future rate of interest which has been agreed between the applicant Bank and the defendants i.e. @ 13% per annum, simple from 17.11.2017, is allowed.

11. 01

9. On the point of limitation, Loan has been sanctioned on 09.04.2014, 09.09.2015 & 08.02.2016; the documents have been executed on 09.04.2014, 09.09.2015 & 08.02.2016; and the original Application has been filed on 19.01.2018. It is seen that the original Application has been filed within 3 (three) years. As such, the original Application appears to have been filed well within the period of limitation.

10. The matter also falls within the territorial as well as pecuniary jurisdiction of this Tribunal. The Applicant Bank has proved to claim made in the original Application. The original application being T.A. No.12 of 2019 (arising out of O.A./52 of 2018 – DRT-3/Kol) deserves to be allowed; hence allowed.

11. In view of the above, I pass the following order:

ORDER

(i) T.A. No.12 of 2019 (arising out of O.A./52 of 2018), filed by the Applicant Bank, is allowed and debt is determined with cost against the defendants No.1, 2 & 3. It is hereby ordered that the defendants No.1, 2 & 3 are directed to pay, jointly and/or severally, the total debt amount of **Rs.47,63,652.00** (Rupees forty seven lakhs sixty three thousand six hundred fifty two) due and payable, inclusive of interest and other charges as calculated upto 16.11.2017; and interest for the period *pendente lite* and future @ 13% per annum with monthly rests from 17.11.2017, till realization of the entire sum due and recoverable.

(ii) Amount, if any, paid by the defendants in the loan account or amount recovered by the Applicant Bank after filing of the Original Application, the same may be taken into account while arriving at the exact amount of dues/debt payable by the defendants. Accordingly, *pendente lite* and future interest shall be calculated on the reduced amount.

(iii) The defendants are debarred from transferring, alienating, encumbering or disposing of the mortgaged immovable property(s), described in 'Particulars of the Mortgaged Property' at page 12 & 20 of the Original Application.

The defendants No.2 & 3 are also debarred from transferring, alienating, encumbering or disposing any other property(s) and assets belonging to them till the aforesaid adjudicated debt amount are recovered from the defendants.

(iv) The defendants are given a time of thirty days from the date of this Final Order / Judgment for repayment of the above mentioned dues, so intimated to them. In case the defendants fail to pay the dues within the above mentioned time, the Applicant Bank is entitled to recover its dues by sale of secured properties, as aforesaid. Applicant Bank is also entitled to proceed against personal properties of the defendants both moveable and immovable and also proceed against the defendants personally to recover the dues, in accordance with law.

(v) Let the Certificate of Recovery be drawn up by Ld. Registrar / Registrar-in-Charge forthwith in terms of Final Order / Judgment for issuance of the same against the defendants No.1, 2 & 3 in favour of Applicant Bank under Section 19(22) of the Recovery of Debts and Bankruptcy Act, 1993 (amended from time to time) and put up the same for signature for issuance.

(vi) Ld. Recovery Officer shall realize the amount as per the Recovery Certificate from defendants No.1, 2 & 3, in accordance with law.

(vii) Ld. Registrar / Registrar-in-Charge of this Tribunal is directed to place Recovery Certificate in terms of this Final Order / Judgment under section 19(22) of the Act of 1993.

**Accordingly, the Original Application, being T.A. No.12 of 2019 (arising out of O.A./52 of 2018), is allowed and stands disposed of.**

File be consigned to Record room.

This order is dictated and corrected by the undersigned and pronounced on this day the 11^th day of March, 2022.

This order is passed by virtual hearing through video conference in the presence of Ld. Counsel for the Applicant Bank, Mr. Anirban Pramanick. None appeared for the defendants.

Copy of the Final Order / Judgment be uploaded in the Tribunal's Website.

Sd/-

(Makena Srinivasa Rao) Presiding Officer DRT-2, Kolkata