IDBI BANK vs GRAPCO INDUSTRIES LTD(IN LIQUIDATION) AND ORS on 28 September 2020

Order

of Order with signature

BEFORE THE DEBTS RECOVERY TRIBUNAL'III KOLKATA PRESENT: -SRI ANIL KUMAR CHATURVEDI. PRESIDING OFFICER. T.A. No'02 OF ZOLZ' (Arising out of o.A. No.89 of 1998) DATE OF DELIVERY OF ORDER Z1"g\2"> . Industrial Development Bank of India 44, ShakesPeare Sarani, Kolkata - 700 017 ' -Versus-

Graoco Industries Ltd , chalachittra Bhawan, 2"" Floor' arii eurut, Cuttack, PIN-753 001'

2. Shri R. P. Jhunjhunwala (DECEASED)' 28, Hastings Park Road, calcutta - 700 027 ' 2(a). Smt. Sushella lhunjhunwala' Widow and Legal Heir ot Late R. P. Jhunjhunwala' 28, Hastlngs Park Road, calcutta - 700 027 ' 2(b). Shri Abhishek Jhunjhunwala ' S/o. Legal Heir of Late R.P. lh unjhunwala, 28, Hastings Park Road' Calcutta - 700 027 2(c). Ms M'ira lhunjhunwala ' And Legal Heir of Late R.P. Jhunjhunwala' 28, Hastings Park Road, calcutta - 700 027.

3. Industrial Credit & Investment Corporation of India Ltd , 163, BackbaY Reclamation' Mumbai - 400 020' AND 2b, Gorkey Terrace, Kolkata- 17' Applicant Bank.

4. State Bank ot'India, Overseas Branch, 33A lawaharlal Nehru Calcutta - 700 071. Bank of Baroda, Road, international Business Branch, "Rubv Hotrse', 8 India Exchange Place, Calcutta - 700 001

5. 6, Canara Bank, Overseas Branch, 2/1 Russel Street, Calcutta-7oo 071' Counsel for the ApPlicant Bank: - Counsel for the Defendant No 1 :- Counsel for the Defendant No'2:- counsel for the Defendants No.2(a) to 2(b):- Counsel for the Defendant No'3:- Counsel for the Defendant No'4:- Counsel for the Defendant No 5:- Counsel for the Defendant No'6:- Defendants. Shri D. Chakra borty. None. None. None. None. Ms. Poetry Dutta. Shri K. N. Mu kherjee' Shri U.K. Goswami.

1. ]UDGE14ENT This is a Transfer Application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutlons Act' 1993 initiated by the applicant bank against the defendants no 1 and 2(a)' 2(b) and 2(c) praying for issuance of Recovery Certificate to the tune of Rs.5810.73 lakhs (i.e. Rs'3214'38 lakhs from the defendant no'1 and Rs.2596.35lakhsfromthedefendantno.2)togetherwithinterest, cost and other usual reliefs' The brief facts of the case as made out in the Transfer Application by the applicant bank is that the defendant no 1 is a Public Limlted Company duly incorporated under the provisions of The Companies Act, 1956. The defendant no 1 was formerly known as Grapco Granites Limited. The original defendant no'2, R P Jhunjhunwala died on 10'08 2001 leaving behind his widow, son and daughter being defendants no'2(a)' 2(b) and 2(c) respectively as leqal heirs and representatives of the deceased defendant no.z, R P' lhunjhunwala' &

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between the defendant no.1 on the one han(l and the defendant no'3 on the other, the defendant no.3, acting as ttre t-ead Institulion and as agent for the applicant, the defendant no.1 agreed to borrow from the applicant and the applicant agreed to lend to the defendant no 1 a sum to the maximum extent of Rs.218.50 lakhs subject to the terms and conditions set out in the said Loan Agreoment and in the General conditions set out in the said loan agreement. To secure the above loan, the defendant no.1 had created equitable mortgage of his property in favour of the applicant The defendant no'1 also hypothecated the whole of its movable proprlrties lncluding plant and machinery in favour of the applicant as security for the loan sanctioned by the applicant in favour of the defendant no.1' By a deed of guarantee dated 13.04 1992, executed by the defendant no.2 in favour of the applicant, the defendant no'2 guaranteed to and agreed with the applicant that in the event of any default on the part of the defendant no.1, in making payment of any payment//repayment of any of the moneys payable by the defendant no'1 to the appllcant under the sald agreement dated 13.04.1992, the defendant No' 2 shall, upon demand, forthwlth pay to the applicant without demur all the amounts payable by the defendant No. 1' Pursuant to a Loan Aqreement dated 11'06'1992 entered into by and between the defendant no'1 on the one han(l and the defendant no'3 on the other, the defendant no.3 acting as the t'ead Institution and as agent for the apPlicant, the defendant no 1 agreed to borrow from the applicant and the defendant no.3, the sums to the maximum extent of Rs.45O.OO lakhs and the applicant and the (lefendant no'3 agreed to lend to the defendant no.1 the said sum subject to the terms and conditions mentioned in the said loan agreement' Out of the total loan of RS.45O.OO lakhs, the share of the applicant was Rs'225'00 lakhs and

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the share of the defendant no.3 was Rs 225,00 lakhs. The defendant no.1 had agreed to pay interest quarterly @ 2006 per annufl By a Deed of Hypothecation dated 11.06 1992, the defendant no 1 hypothecated in favour of the applicant and the defendant no.3 the whole of items lmmovable properties. The defendant no.2 had guaranteed to and agreed with the applicanl and the defendant no 3 that in the event of any default on the part of the defendant no.1 in payment/repayment of any of the moneys payable by the defendant no.1 under the said loan agreement dated 11.06.1992 to thr: applicant and the defendant no.3, the defendant no'2 would, upon demand, forthwith pay to the applicant and the applicant no.3 without demur all the amounts payable by the defendant no.1 under the loan agreement. Pursuant to a Foreign Currency Loan Agreement dated 30.09.1992 entered lnto by and between the defendant no.1 on the one hand and the defendant no.3 on the other, the defendant no.3 acting as the Lead Institution and as agent for the appli(:ant, the defendant no.1 agreed to borrow from the appllcant and the applicant agreed to lend to the defendant no.1 Foreiqn Currency Loan to the maximum extent of DM 731.038 under KFW line of credit and DM 129,007.40 under commercial borrowings DM-III, equivalent to about Rs.142.00 lakhs. By a deed of hypothecatlon dated 30.09.1992, the defendant no.1 hypothecated all the movable properties in favour of the defendant no.1. The defendant no.2 had executed a t)eed of Guarantee dated

29. Og.7gg2 in favour of applicant and agreed in principle l:o lend and advance to the defendant no.1 a sum of to the nlaximum extent of DM 1,605,710 equivalent to Rs.265.00 lakhs. Pursuant to a Loan Agreement dated 19.10.1992 entered into by and between the defendant no.1 on the one hand and the defendant no'3 on the other, the defendant no.3 acting as the Lead Institution and as agent For the applicant, the defendant no.1 .rgreed to borrow and the

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13. applicant agreed to lend foreign currency loan to the maxlmum extent of DM 632.096 under KFW line of credit and DM 111,547 under Commercial Borrowings DM-III, equivalent to about Rs.122.73 lakhs, on the terms and conditions contalned in the said Loan Agreement. By a deed of hypothecation dated 19.10.1992, the defendant no.1 hypothecated all the movable properties in favour of the defendant no.1. The defendant no.2 had executed a Oeed of Guarantee dated 29.09.1992 guaranteeing due repayment of the loan of DM 1,605,710 equivalent to Rs.265 lakhs. The loan agreement dated 30.09.1992 was entered into for Rs.142 lakhs for another sum of Rs.122.73 lakhs covered by the said Letter of Intent dated 25.03.1992. The above mentioned hypothecation agreement dated 19.10.1992 had been entered lnto by the defendant no.1. As such, the Deed of Guarantee dated 29.09.1992 executed by the defendant no.2 covered the loans granted by the applicant to the defendant no.1, under both the said agreements, dated 30.09.1992 and 19.10.1992.

between the defendant no.1 on the one hand and the apPlicant on the other, the defendant no.1 agreed to borrow and the applicant agreed to lend to the defendant no.1 the maximum extent of Rs.200 lakhs as short term loan against working capital on the terms and conditions contalned therein which was agreed by the defendant no.1. Pursuant to the Loan Aqreement dated 04.02.1994 entered into by and between the defendant no.1 on the one han(l and the defendant no.3 on the other, the defendant no.3 acting as the Lead Institution and as agent for the applicant, the defendant no.1 agreed to borrow and the defendant no.3 and the applicant agreed to lend a sum to the maximum extent of Rs.1000 lakhs subject to the terms and conditions. Out of the said loan of Rs.1000 lakhs, the share of the applicant was Rs.5OO lakhs and the share of the defendant no.3 was Rs.500 lakhs. L

74. The loan amount together with interest, additional interest, liquidated damages and all other moneys was to be secured by a first mortgage and charge in favour of the lenders of all the borrower! immovable properties and a first charge by way of hypothecation in favour of the lenders of all the borrower's movable properties including plant and machinery. By a Deed of Hypothecation dated 04.02.1994 executed by the defendant no.1 in favour of the defendant no.3, the defendant no.3 acting as the Lead Institution and as agent for the applicant, the defendant no.1 hypothecated the whole ol' its movable properties including plant and machinery in favour of the applicant and the defendant no.3 as security for the loans sanction by the applicant and the defendant no.3. The defendant no.2 had also guaranteed by a deed of guarantee dated 04.02.7994 and agreed with the applicant and the defendant no.3 that in the event of default on the part of the defendant no.1 in payment/repayment of any moneys, the defendant no.z would, upon demand; forthwith pay to the applicant and the defendant no.3.

between the defendantno,l and the applicant, the apPlicant agreed to lend to the defendant no.1 and the defendant no.1 agreed to borrow from the applicant a loan to the maxlmum extent of Rs.500 lakhs with certaln terms and conditions which was accepted by the defendant no. 1. By a Deed of HyPothecation dated 29.03.1994 executed by the defendant no.1 in favour of the applicant, the defendant no.1 hypothecated in favor of the applicant all its machineries and other movable assets in favour of the applicant as security for the loans sanction by the apPlicant.

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-. t7. ? On 27.O4.1993, 23.06.1993, 08.07.1993 and 14.01.1997, the defendant no.1 had created equitable mortgage by deposit of title deeds with the defendant no.3, the defendant no.3 acting as agent of the applicant in respect of immovable properties. After availing the loan, the defendant no 1 had utilized the said loan amount in its business and operated the loan accounts at the lnitial stage but subsequently the defendants had failed to operate the said loan accounts in terms of the agreement between the parties as a result of which the loan accounts became irregular. A sum of Rs.5810.73 lakhs is due against the defendants (i.e. Rs'3214.38 lakhs from the defendant no.1 and Rs 2596.35 lakhs from the defendant no.2), which the defendants had not paid despite repeated demands and request. Finding no other way to recover the dues of the applicant, the applicant had filed this Transfer Application for the recovery of the aforesaid amount and for the issuance of Recovery Certificate against the defendants no.1 and 2' Notices were issued to the defendants to show cause as to why the relief prayed for by the applicant bank be not granted After issuance of the notice, the defendants no.1 and 2 had neither appeared nor had Rted their show cause reply. The remaining defendants had appeared through their respective Counsels.

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20. I have Perused the record, relevant documents/materials available on the

21. The defendants no.1 and 2 had not contested the case of the applicant bank. Thus, the point for determination in this case is (i) Whether the claim of the applicant is within time ? (ii) Whether the defendants had utilized the loan facilities granted by the bank ? (lii) whether the defendants are liable to the amount due to the applicant or not ? o-

22. During the pendency of the case, the 75 workers of Bangalore Unlt of Grapco Industries Ltd. (In Liquidation) have filed their written submissions on 17th December, 2019 before this Tribunal and prayed this Tribunal to implead them as parties to the instant proceedings and submited their adjudicated claim for Rs.16,99,398.00 and Rs,42,72,855.00 resPectivelY. Initially the workers had approached the Hon'ble High Court at Karnataka in w.P. No.46216 -46277 ot 2OO2 dated 28.07.2003 filed by the Workers where permission was given to approach this Tribunal' Accordingly, the application was filed'

24. This Tribunal has passed the Order on 22nd February, 2020 in TA No' 04 of 2Ol2 directing the official liquidator attached with the High Court of Orissa, Cuttack of this Company in liquidation which is defendant No. 1 to file a report along with adjudicated claim of the workers, if so invited along with their list and amount. The official liquidator has filed his report dated 9th March, 2020' As per the report the claim of workers are yet to be invlted The official liquidator further claims that he has no funds of the Company i'e' defendant no. 1, which ls in liquidation, in his hand to invite claims' The official liquidator has prayed for deposit of a sum of Rs' 3,00,000/- with his office for publication of notices in newspapers in accordance with ComPanies (Court) Rules, 1959. In view of this the omcial liquidator's report is taken on record. provisions of Section 19, Sub-Section 19 of the Recovery of Debts Bankruptcy Act, 1993 provides as below : "[(19) where a certificate of recovery is issued against a company as defined under the Companies Act, 2013 and such company is under liquidation, the Tribunal may by an ordet direct that the sale proceeds of secured assets of such company be

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27. distributed in the safie manner as provided in section 326 of the Companies Act, 2013 or under any other law for the time being in force.l" The applicant by oral and documentary evidence has established its case. The documentary evidence comprises from Annexure/Exhibit-A to Annexure/Exhibit-Z/3, which are available in paper book filed by the applicant. From the perusal of the documents referred above and the certifled copy of the statement of account, which is filed as Annexure/Exhibit-A lo z/3, it is established that the defendants had availed the financial facilities from the applicant bank and had withdrawn the amount through the account.

28. The applicant has not claimed any relief against the defendants no' to 6 and impleaded them as proforma defendants. Hence, no relief granted against the defendants no. 3 to 6. is

29. From the Perusal of Annexure/Exhibit-z/3, lhe lakhs (RuPees fifty eight only) which the aPplica nt no.1 and 2. the Statement of Account which is total outstanding comes to Rs.5810.73 crores ten lakhs seventy three thousands is entitled to recover from the defendants

30. Since the defendant no.2 had expired and the defendants no'z (a) '

(b) and 2 (C) had stepped into the shoes of the deceased defendant no.2 who had inherited the estate of the deceased defendant no'2' hence the said defendants no.2 (a),2 (b) and 2 (C) are also liable to the dues of the bank amounting to Rs.2596.35 lakhs besides interest accrued to it till the date of realization However, the liability of the defendants no.2 (a), 2 (b) and 2 (C) shall be limited to the extent they had inherited the estate of Late R. P. lhunjhunwala and there shall be no personal liability of the defendants no.2 (a), 2 (b) and 2 (C)' a.-

31. In view of the above discussion and after considering the entire case records and the documents filed by the applicant, I have no hesitation to hold that the applicant is entitled to recover a sum of Rs'5810'73 lakhs from the defendants no.1 and 2 who are liable for the same' The applicant bank shall also be entitled to pendentelite and future interest on the said amount @ L?o/o per annum with simple from the date of filing of the Original Application till the date of realization'

ORDER

(1) T.A. No.O2 ol ?OlZ filed by the ApPlicant Bank is allowed and debt is determined with cost against the defendants no'1 and 2(a) to 2 (c). It is hereby ordered that applicant bank is entitled to recover from the defendants the total amount to the tune of Rs.5810.73 lakhs (Rupees Fifty eight crores ten lakhs seventy thee thousand only) {i.e. Rs.3214'38 lakhs from the defendant no.1 and Rs.2596.35 lakhs from the defendant no'2(a) to 2(c)) with pendentelite and future interest @ L2o/o pet annum with simple on the amount due from the date of flling of the Transfer application, i,e. 27.O4.f998 till full and final realization of the claim amount. The liability of the defendants no.2 (a), 2 (b) and 2 (c) to pay the aforesaid amount shall be limited to the extent they had inherited the estate of Late R. P. Jhunjhunwala and there shall be no personal liability of the defendant no'2 (a), 2 (b) and 2 (C) to pay the said amount.

(2) The omcial liquidator is entitled to receive Rs' 3 lakhs out of the amount lying with the Joint Receiver/Registrar of this Tribunal' who is directed to release Rs. 3 lakhs in favour of the official liquidator attached with the High Court of Orissa at Cuttack for inviting the claims of the workers.

(3) The petitlon of the 75 workers of Bangalore Unit of Grapco Industries Limited is disposed of with the direction to approach the official liquidator attached with the High Court of orissa at Cuttack of the ComPanies (in liquldation) as and when he will invite the claims of the workers The official liquidator after adjudication of claims is entitled to receive the amount' a..

(s) Accordingly, the Charge Holder Bank is directed to keeP some amount out of the sale proceeds lying with the Joint Receiver/Registrar of this Tribunal, so that as and when official liquidator adjudicates the claims of the workers, this is distributed in the same manner as provided in Section 326 of the Companies Act, 2013 (18 of 2013) or under any other law for the time being in force. Defendants are debarred from disposing, alienating or dealing with any of the properties belonging to them till the aforesaid decretal debt is recovered from the defendants. Defendants are given a time of thirty days from the date of the Judgement/Final Order for repaying of the above mentioned dues, so intimated to them. In case the defendants fails to pay the dues within the above mentioned time, the applicant bank is entitled to recover its dues by sale of secured assets, if any. Applicant bank is also entitled to proceed against personal properties of the defendants (Both movable and immovable) and also proceed against the defendants personally to recover the dues in accordance with law. Let the Certificate of Recovery be drawn up by Ld. Registrar forthwith in terms of Judgement for issuance of the same against defendants in favour of the applicant bank under Section 19 (22) of the Recovery of Debts and BankruPtcy Act, 1993 and put up the same for issuance of the Certincate' Ld. Recovery Officer shall realize the amount as per Recovery Certificate from the defendants in accordance law. Ld. Registrar of this Tribunal is directed to deliver recovery certificate in term of the final order/judgement for recovery of the sum against the defendants in favour of the Applicant Bank under Section lg (22) of the Recovery of Debts due to the Bank and Financial Institutions Act, 1993 now known as Recovery of Debts and Bankruptcy Act, 1993. the with o-

(9) Parties are directed to appear before the Recovery officer on 16.10.2020 for further action in accordance with law in the event the entire amount ls not paid by the said date.

(10) Accordingly, the Original Application being T.A. No.02 of 2012 is allowed and stands disposed of. Copy of the Judgement/Final Order be upload in the Tribunal's website. File is consigned to the Record Room. ( Dictated to Steno, transcrlbe(Lby,him, corrected, siqned and ' f ronounceo oy me in the yiidftdr ri on this the 6.*L..day of

5. |SP-JI-\ ' 1"2' ) A '\q D,l"-r^'\i..f ( ANIL KUMAR CHATURVEDI ) PRESIDING OFFICER.