INDIAN OVERSEAS BANK vs ENTALLY ASTHA on 17 March 2022

1. 1. **Entally Astha**, Flat No.1B, 1^st Floor, Indralaya, 21, Keyatala Road, Kolkata – 700029.

2. 2. **Smt. Nabanita Bhattacharjee**, wife of Pinaki Bhattacharjee, Authorised Signatory of Entally Astha, 3, New Santoshpur, 1^st Lane, Fiat No.10, Piyali Apartment, Kolkata – 700075.

3. 3. **Sri Tarun Banerjee**, Authorised Signatory of Entally Astha, Flat No.1B, 1^st Floor, Indralaya, 21, Keyatala Road, Kolkata – 700029.

4. 4. **Smt. Jayati Banerjee**, wife of Tarun Banerjee, Secretary of Entally Astha, P-18A, CIT Road, Entally, Kolkata – 700014; and also at Flat No.1B, 1^st Floor, Indralaya, 21, Keyatala Road, Kolkata – 700029.

5. 5. **Smt. Geeta Banerjee**, wife of Benoy Kumar Banerjee, President of Entally Astha, 35F, 2^nd Street, Debjani Apartment, Modern Park, Santoshpur, Kolkata – 700075.

6. 6. **Smt. Shibani Das**, Vice President of Entally Astha, 585, Madurdaho Street, Kolkata – 700107.

7. 7. **Smt. Supriti Deb Roy Chowdhury**, Treasurer of Entally Astha, 2/49A, Bijoygarh, Kolkata – 700032.

8. 8. **Sri Pinaki Bhattacharjee**, Guarantor of Entally Astha, 3, New Santoshpur, 1^st Lane, Flat No.10, Piyali Apartment, Kolkata – 700075.

..... Defendants

Counsel for parties:

For the Applicant Bank : Ms. Aparajita Ghosh & Ms. Sangeeta Ghosh For the Defendants : *Ex parte.*

**FINAL ORDER / JUDGMENT**

Delivered on 17.03.2022

The Applicant, Indian Overseas Bank, tendered the present Application being O.A. No.743 of 2018 on 11.09.2018 against eight defendants under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 (amended from time to time) for recovery of a sum of Rs.1,14,51,822.40 (Rupees one crore fourteen lakh fifty one thousand eight hundred twenty two and paise forty only) is due and payable as on 31.08.2018 and further interest @ 13.70% per annum with monthly rests from 01.09.2018, 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, such has been recorded in Ld. Registrar, Kolkata DRT-3's Order dated 30.10.2019 and the same has been renumbered as T.A./306 of 2020 vide Ld. Registrar's order dated 11.06.2020.

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 a registered society in the name and style of Entally Astha is a Micro Finance Institution working in West Bengal. Defendant No.2 & 3 are the Authorised Signatories for Defendant No.1 Society. Defendant No.4 is holding the post of Secretary while Defendant No.5 is holding the post of President in the said Society. Defendant No.6 is holding the post of Vice President, Defendant No.7 is holding the post of Treasurer and Defendant No.8 is the Guarantor for defendant No.1 society and has executed Guarantee Agreement. One Anusua Ganguly, since deceased, was holding the post of Assistant Secretary of Defendant No.1 Society and Applicant Bank craves leave of the DRT-3 to implead the legal heirs of Late Anusua Ganguly as and when their details are available.

(ii) The Defendants approached and applied to the Applicant Bank in the month of August 2014 with a request for financial assistance for an amount of Rs.10.00 crores; copy of loan Application dated 11.08.2014 is annexed and marked as Annexure 'A'. Upon consideration of said proposal, Applicant Bank was pleased to grant / sanction a credit facility for Rs.5.00 crores (Rupees five crores) to the defendant No.1 society vide sanction advice dated 24.10.2014. The Defendants No.4, 5 & 8 have duly accepted the terms and condition of the said credit sanction advice. Copy of the said Credit Sanction Advice dated 24.10.2014 is annexed and marked as Annexure 'B'.

(iii) The said credit facility of Rs.5.00 crores has been approved by defendant No.1 society by a Board Resolution dated 25.10.2014 and further resolved that Defendants No.2, 3 & 4 along with Smt. Dona Basu are authorized to execute all necessary documents. Copy of said Board Resolution of Defendant No.1 dated 25.10.2014 is annexed and marked as Annexure 'C'. The Defendant No.1 has also given an undertaking dated 29.10.2014 with respect to sanctioned amount of Rs.5.00 crore. Copy of said Letter of Undertaking dated 29.10.2014 is annexed and marked as Annexure 'D'.

(iv) In consideration of said sanctioned credit facility, the Defendants had executed the following security documents on 14.11.2014 in favour of Applicant Bank:

- (a) Demand Promissory Note for Rs.5.00 crore duly executed by Defendants No.4, 5, 6, 7 and Smt. Dona Basu;

- (b) Hypothecation of Book Debts for an amount of Rs.5.00 crore duly executed by Defendants No.2, 3, 4, 5, 6, 7 and Smt. Dona Basu;

(c) Term Loan Agreement for Rs.5.00 crore duly executed by Defendants No.4, 5, 6, 7 and Smt. Dona Basu; and (d) Letter of Hypothecation (for securing Machineries/Goods/Book Debts) for Rs.5.00 crore duly executed by Defendants No.4, 5, 6, 7 and Smt. Dona Basu.

Copies of aforesaid documents are annexed and marked as Annexure 'E-1' to 'E-4'.

(v) To secure the aforesaid credit facilities, the Defendant No.8 had executed a Guarantee for Cash Credit (Personal Guarantee) dated 14.11.2014. The Applicant submits that the said Guarantee is continuing guarantee for the sum guaranteed together with interest and charges thereon. Copy of the duly signed and executed said Guarantee Agreement by Defendant No.8 along with Defendant No.2, 3, 4, 5, 6, 7 and Smt. Dona Basu dated 14.11.2014 is annexed and marked as Annexure 'F'.

(vi) The Defendant No.1 society informing about the resignation of said Smt. Dona Basu passed the board resolution dated 22.11.2014. Copy of the said Board Resolution of Defendant No.1 dated 22.11.2014 is annexed and marked as Annexure 'G'. Vide Board Resolution dated 22.11.2014, the Defendant No.1 informed the reformation of Governing Body Members with their Designations to the Applicant Bank. The said Board resolution dated 22.11.2014 is annexed and marked as Letter 'H'.

(vii) Defendant No.1 vide letter dated 25.11.2014 informed the applicant Bank that Mrs. Dona Basu Treasurer of the organization has resigned vide resignation letter dated 18.11.2014, and a new member Mrs. Anusuya Ganguly as new governing body member was introduced of the organization. Copy of said letter dated 25.11.2014 is annexed and marked as Annexure 'I'.

(viii) The new Board members Anusuya Ganguly (since deceased) on 15.12.2014 executed the following documents in favour of the Applicant Bank for sanctioned credit facility Rs.5 crore:

(a) Demand Promissory Note for Rs.5.00 crores; (b) Hypothecation of Book Debts for an amount of Rs.5.00 crorees;

(c) Term Loan Agreement for Rs.5.00 crore and (d) Letter of Hypothecation (for securing machineries / goods / book debts) for an amount of Rs.5.00 crore duly executed by Defendants No.4, 5, 6, 7 and Late Anusuya Ganguly.

Copy of said documents are annexed and marked as Annexure 'J-1' to 'J-4'.

(ix) Defendant No.8 had executed a Guarantee for Cash Credit etc. (Personal Guarantee) dated 15.12.2014 and the Applicant submits that the said guarantee is continuing guarantee for the sum guaranteed together with interest and charges thereon. Copy of the duly signed and executed Guarantee dated 15.12.2014 executed by Defendant No.9 along with 4, 5, 6, 7 and Late Anusuya Ganguly is annexed and marked as Annexure 'K'.

(x) Defendant No.1 vide letter dated 08.09.2017 informed the Applicant Bank about the change in the address of the Head Office-cum-registered Office of the Defendant No.1 Society. Copy of the said letter dated 08.09.2017 is annexed and marked as Annexure 'L'.

(xi) Defendants No.2 & 3 as authorized signatories of Defendant No.1 and Defendant No.8 as Guarantor for Defendant No.1 duly signed and executed separate Revival Letters dated 18.02.2017 thereby acknowledging and confirming the debt & liabilities in the Account. Copy of the said Revival Letters dated 18.02.2017 are annexed and marked as Annexure 'M'. The Defendants No.2 & 3 on behalf of Defendant No.1 from time to time duly executed balance confirmation letters dated 05.04.2017, 30.09.2017 and 04.04.2018 acknowledging the debt and liability. Copies of said three letters are annexed and marked as Annexure 'N'.

3. The defendants availed and enjoyed the aforesaid credit facilities by opening an Account in Defendant No.1's name (M/s Entally Astha) in applicant Bank's Baruipur Branch, at Padmapukur, Salepur, Baruipur, Kolkata - 700144. The sanctioned loan amount was disbursed to the defendant No1's / borrower(s) loan Account. However, the defendants failed and neglected to comply with the agreed terms and conditions of the said facilities; they did not repay the outstanding Bank's dues and overdue interests of the loan amount. Despite repeated requests / reminders made by the applicant Bank, the defendants did not pay any attention to regularize the Account. The defendants committed breach of terms & conditions of said sanction. Since the defendants / borrower(s) failed to regularize the Account, the account became irregular and was classified as N.P.A. on 31.12.2017. Since the defendants / borrower failed to liquidate the dues with the applicant Bank inspite of repeated requests and reminders, the applicant Bank finding no alternative issued a re-call demand Notice dated 25.06.2018 to the defendants calling upon them to repay the outstanding dues amounting to Rs.1,10,33,909.40 as on 02.06.2018, but the defendants did not comply the said notice, copy of demand Notice dated 25.06.2018 along with postal receipts are annexed and marked as Annexure 'O'. Certified copies of Statements of Account along with Certificate under Bankers' Books Evidence Act, with statement of claim (Annexure 'P' & 'Q'), have been filed to show and prove the dues, and future interest @ 13.70% per annum with monthly rests, 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 to 8 by the Ld. DRT-3. Vide order dated 14.12.2018 Ld. Tribunal was enjoined the hypothecated movable assets described in para 3A at page 6 & 7 of the O.A. 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, such has been recorded in Ld. Registrar, Kolkata DRT-3's Order dated 30.10.2019 and the same has been renumbered as T.A./306 of 2020 vide Ld. Registrar's order dated 11.06.2020. It is observed that service of Notices / summons upon the Defendants were successfully delivered upon all the defendants by post on 15.02.2021, 11.02.2021 & on 12.02.2021, such has been recorded vide Ld. Registrar's order dated 23.02.2021; hence, service of summons upon all the defendants were successfully effected by post. Despite service and granted opportunities, the defendants did not appear nor filed the written statement; hence, all the defendants were ordered to be proceeded *ex-parte* vide order dated 09.03.2021. An I.A. being I.A./1002 of 2021 dated 04.09.2021 has been filed by the Applicant Bank with an interim prayer to grant subsequent attachment of property belonging to defendants No.2 and 8 praying for allowing the said I.A. It is observed vide order dated 15.11.2021 that the schedule property mentioned in Schedule 'A' of the said I.A. belonging to the defendants No.2 & 8 also mortgaged with Canara Bank and opportunity to file objection was provided but the defendant No.2 has not complied the said order of the Tribunal and Ld. Counsel for applicant Bank praying to pass an order for attachment in respect of the Schedule 'A' property as second charge. The said I.A./1002 of 2021 was allowed and disposed of vide order dated 15.11.2021 with a direction that the said schedule property mentioned in the instant I.A. is attached, accordingly as second charge to the Applicant Bank. Ld. Counsel for applicant Bank has submitted arguments on 07.12.2021. In accordance with the liberty granted by the Tribunal vide order dated 07.12.2021, Applicant Bank has filed the written notes of arguments on 07.12.2021.

5. Evidence-on-affidavit, filed by the Applicant Bank has been affirmed by Sri Niraj Kumar, Senior Manager of applicant Bank's Baruipur Branch, at Padmapukur, Salepur, Baruipur, Kolkata – 700144 along with the original documents executed by the Defendants. Original documents have been produced by the Applicant Bank; the same was verified with copies of the documents are annexed with the O.A. and the originals have been returned to Sri Niraj Kumar, Senior Manager of applicant Bank's Baruipur Branch, at Padmapukur, Salepur, Baruipur, Kolkata – 700144 on 11.03.2019, such has been recorded in Ld. Registrar of DRT-3 Order dated 11.03.2019. The documents produced by the Applicant Bank are exhibited and marked as Exhibit 'A-1' to 'A-22'.

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 Sri Niraj Kumar, Senior Manager of applicant Bank's Baruipur Branch, at Padmapukur, Salepur, Baruipur, Kolkata – 700144 on 11.03.2019, such has been recorded in Ld. Registrar of DRT-3 Order dated 11.03.2019). Applicant Bank has corroborated the averments made in the T.A./306 of 2020 (arising out of O.A./743 of 2018). Applicant Bank has proved the sanction of credit facility amounting to Rs.5.00 crores.

Applicant Bank has proved the hypothecated moveable assets, described in para 3A at page 6 & 7 of the O.A. and mortgaged immovable property(s) as second charge as per order dated 15.11.2021, described in Schedule-'A' annexed in the IA/1002 of 2021.

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 stated that the debit balance in the Loan Account (inclusive of accrued and unapplied interests calculated upto 31.08.2018) is **Rs.1,14,51,822.40** (Rupees one crore fourteen lakhs fifty one thousand eight hundred twenty two and paise forty) as on 31.08.2018. which is the amount claimed by the applicant Bank in the original Application, and the defendants No.1 to 8 are, jointly and / or severally, liable to repay the said amount to the applicant Bank with *pendente lite* and future interest, till realization. I allow the claim as made by the applicant Bank in the original Application. Applicant Bank has prayed future interest @ 13.70% per annum with monthly rests, while in the D.P. Note dated

14.11.2014 the rate of interest i.e. @ 10.25% per annum, has been mentioned. Therefore, the *pendente lite* & future rate of interest which has been agreed between the Applicant Bank and defendants i.e. @ 10.25% per annum, simple from 01.09.2018, is allowed.

9. On the point of limitation, Loan has been sanctioned on 24.10.2014, documents have been executed on 14.11.2014, and original Application has been filed on 11.09.2018. It is observed that the Defendants No.2 & 3 as authorized signatories of Defendant No.1 and Defendant No.8 as Guarantor for Defendant No.1 duly signed and executed separate Revival Letters dated 18.02.2017 thereby acknowledging and confirming the debt & liabilities in the Account; Also the Defendants No.2 & 3 on behalf of Defendant No.1 from time to time duly executed balance confirmation letters dated 05.04.2017, 30.09.2017 and 04.04.2018 acknowledging the debt and liability. 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 O.A./T.A. The T.A./306 of 2020 (arising out of O.A./743 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./306 of 2020 (arising out of O.A. No.743 of 2018) is allowed and debt is determined with cost against the Defendants No.1 to 8. It is hereby ordered that the Defendants No.1 to 8 are hereby directed to pay, jointly and/or severally the total debt amount of **Rs.1,14,51,822.40** (Rupees one crore fourteen lakhs fifty one thousand eight hundred twenty two and paise forty) due and payable, inclusive of interest and other charges as calculated upto 31.08.2018; and future interest for the period *pendente lite* @ 10.25% per annum with effect from 01.09.2018, simple, till realization of the entire sum due and recoverable.

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

(iii) Defendants are debarred from transferring, alienating, encumbering or disposing of the hypothecated movable assets, described in para 3A at page 6 & 7 of the original Application.

(iv) Pursuant to the order in I.A./1002 of 2021 filed by the Applicant Bank in respect of mortgaged property(s) as detailed in schedule 'A' of the instant I.A. belonging to the defendants No.2 & 8 which were also mortgaged with Canara Bank and the above prayer(s) made by the applicant Bank for order of attachment in respect of the said schedule 'A' property(s) as second charge which has been considered and allowed and the same is attached as second charge of the applicant Bank. The said properties which are detailed hereunder:

- (a) ALL THAT four storied building on the land measuring about 5 (five) cottahs 8 (eight) chittacks 31 (thirty one) be the same little more or less lying and situated at postal No.3, new Satoshpur 1^st Lane, Calcutta – 700075 (at present premises No.19, New Satoshpur Main Road), Ward No.104, J.L. No.22, R.S. No.19, Mouza – Santoshpur, Khatian No.336, Dag No.439 under Police Station – Kasba, Additional District Sub-Registration Office, Sealdah, under Calcutta Municipal

Corporation, butted and bounded by District – 24-Parganas (S); i.e. on the North: 12' – 00" wide C.M.C. Road, on the South: House of Leela Majumdar, on the East: 12' – 00" wide C.M.C. Road, on the West: 12' – 00" wide C.M.C. Road.

(b) ALL THAT the complete flat in second floor being unit No.10 on 2^nd floor West / North corner of the building measuring an area of 582 (Five hundred eighty two) sq.ft. more of less consisting of 2 Bed rooms, 1 Dining-cum-drawing room, 1 Kitchen, 2 toilet in the building on the land described in the First Schedule hereinabove and delineated in the map or plan annexed herewith the colour "Red" together with common area and areas described in third schedule hereunder, butted and bounded by Boundary – on the North: 12' – 00" wide C.M.C. Road, on the South: stair case, on the East: Flat of Arindam Poddar, on the West: 12' – 00" wide C.M.C. Road.

The Defendants are also debarred from transferring, alienating, encumbering or disposing of any other property(s) and assets belonging to them, either movable and/or immovable, till the aforesaid adjudicated debt amount are recovered from the Defendants.

(v) Defendants No.1 to 8 are hereby 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 specified time, the Applicant Bank is entitled to recover its dues by sale of mortgaged 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 No.2 to 7 personally to recover the dues, in accordance with law.

(vi) Let the Certificate of Recovery be drawn up by Ld. Registrar forthwith in terms of Final Order / Judgment for issuance of the same against the Defendants No.1 to 8 in favour of the 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.

(vii) Ld. Recovery Officer shall realize the amount as per the Recovery Certificate from the Defendants No.1 to 8, in accordance with law.

(viii) Ld. Registrar 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./306 of 2020 (arising out of O.A./743 of 2018) is allowed and stands disposed of.**

This order is dictated and corrected by the undersigned and pronounced on this the 17^th day of March, 2022.

This order is passed by virtual hearing through video conference in the presence of Ld. Counse for the Applicant Bank, Ms. Aparajita Ghosh. 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