Bank of Baroda vs GRAPCO INDUSTRIES LTD AND ORS on 28 September 2020

1. Bank of Baroda Ruby House,8, India Exchange Place calcutta-700001 -Versus-

1. Grapco Industries Ltd. Somnath Industrial Estate Balasore, Orissa-756019 AND "oM Tower", 15'n Floor 32,JLNehruRoad calcutta-700071 Shri R. P. Jhunjhunwala (DECEASED), 28, Hastings Park Road, Calcutta - 700 027.

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5. State Bank of India - Balasore Branch Balasore, Orissa AND Overseas Branch 33A,JLNehruRoad calcutta - 700 071

6. Canara Bank ll2,JCRoad,Bangalore AND also at Overseas Branch 2/1, Russel Street Calcutta ... ProformaDefendants. CounselfortheApplicantBankNo.l: - ShriKVViswathan Counsel for the Defendant No.1 t- ... None. Counsel for the Defendant No,2i- ... None. Counsel for the Defendant No,3:- ... None Counsel for the Defendant No,4:- ... Mr. Debasish Chakraborty Counsel for the Defendant No.s:- ... l'1s. poetry Dutta. Counsel for the Defendant No.6:- .. None Counsel for the Receivers;- ... Shri N. Mishra. -]UDGEMENT

1. This is a Transfer Application under Section 19 of the Recovery of Oebts Due to Banks and Financial Institutions Act, 1993 initiated by the applicant bank against the defendants/respondents No.1 praying for issuance of Recovery Certificate to the tune of Rs.3,18,17,603.15 together wlth interest, cost and other usual reliefs.

2. 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 Limited Company duly incorporated under the provisions of The Companies Act, 1956. The defendant No.1 was formerly known as Grapco Granites Limited. The defendants No.2 to 6 hold pari passu charge with the applicant in the immovable and movable properties ofthe defendant No.1. A

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(a)

(b)

(c) In or about March, 1992 the Applicant at the request of the Respondents No. I and 2, sanctioned credit facilities under Term Loan up to a limit of Rs.2,63,00,255/-. To avail of the aforesaid credit facility and in consideration of the applicant bank having agreed to act at the request of the defendants, to grant Term Loan up to a limit of Rs. 2,63,000,255/-, the defendant No. 1 executed the following documents and also for creation of security, including by way of mortgage deposited title deeds in favour of the applicant bank according to their terms and conditions ;

4. Demand Promissory Note for Rs. 2,63,00,2551- Hypothecation of moveable machinery Stamped Undertaking To collaterally secure the aforesaid facilities and advances the defendant no. 1 executed a general form of guarantee in favour of the applicant bank on March 27, 1992 under which the defendant No. 2 undertook joint and several liability and agreed to pay the said sum of Rs. 2,63,OO,2551- together with interest, costs, charges, expenses and other moneys to the applicant bank forthwith upon demand made by the applicant. As and by way of further security for the due repayment and discharge of the term loan of Rs. 2,63,00,255l- the defendant No. 1 created a Joint Mortgage by deposit of title Deeds on 27th April, 1993 in favour of the applicant bank and the proforma respondent Nos, 3 to 6 over the defendant No. 1's immovable properties situated at Plot No. 15E, at village Balagaranahalli, Hobli, Attibele, Anekal Taluk, District Bangalore admeasuring 21016 sq. meters. The defendant No. 1 also executed a Stamped Undertaking on April 27, 1993, inter-alla, agreeing to complete the loint Mortgage by deposit of title deeds in respect of its immovable properties at Balasore, Orissa and Alwar, Rajasthan,

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11. The defendant No. 1, in accoTdance with the terms and conditions of the sanction was required to repay the term loan in 24 quarterly installments of Rs.10,96,000/- each beginning from February, 1994. The defendant No. 1, however, failed and neglected to pay the quarterly installments under the term loan save and except the first installment. The defendant No. 1 also failed and neglected to pay the interest due on the term loan account on the due dates. At the request of the defendant No. 1, the applicant bank allowed from time to time overdrawing in the current account on and from March 9, 1995. The defendant No. 1in spite of demand failed and neglected to pay the overdrawing in the Current Account and committed breach€s of the terms and conditions of the covenants by the said defaults and the term loan account became irregular, Under the circumstances, the applicant bank, through its advocate, by a notice dated 75106/1997, called upon the defendant No. 1to pay a sum of Rs. 3,00,03,858.15 being the balance due at the foot of the term loan account and overdraft account with further interest thereon frcm OL/O61L997 @ 18o/o per annum with quarterly rests within 24 hours after receipt of the Demand Notice. A separate notice was also issued to the defendant No. 2 by the said advocate. In spite of receipt of the notice, the defendants No. 1 & 2 have and each one of them has failed and neglected to pay the sum demanded. After appropriating the installment paid by the defendant No. 1 and after appropriating all items of credit and adjustment, the defendant No. 1 & 2 are liable to pay to the applicant a sum of Rs. 3,18,17,603.15 with interest calculated up lo L2lloll997 as per following : Term Loan (inclusive of interest accrued Frcm L/611997 to l2lll/1997 b]l not Charged) Overdraft (inclusive of interest accrued Frcm 26/70/7995 to 12110/1997 but not Charged) Rs.2,93,41,573.00 Rs. 24,76,O3O.15

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10. Total : Cr Rs.3,18,17,603.15

t2. Notices were issued to the defendants to show cause as to why lhe relief prayed for by the applicant bank be not granted. After issuance of the notice' the defendants No.l had neither appeared nor had filed thr:ir shr)w cause reply. The remaining defendants had appeared through their respective Counsels. I have perused the relevant documents/materlals available on the record' The defendants No.l had not contested the case of the applicant bank' Thus, the point for determination in this case is (i) Whether the cla m of the applicant is within time ? (ii) Whether the defendants had utilized' the loan facilities granted by the bank ? (iii) Whether the defendants are lial'lle to the amount due to the applicant or not ? During the pendency of the matter, the applicant bank has state(l that an application fildd in T.A No. 1 (ICICI Bank Limited Vs' Grapco Industrles & Others) by Kotak Mahindra Bank Limited, the assignee of Industrial Credit and Investment Corporation of India Llmited/ICICI Bank Linrited for disbursement of funds lying with the Jolnt Receivers and the Assistant Registrar, Debts Recovery Tribunal-I upon which directions were made by this Tribunal to file respective claims of all the banks having pirri passu charges so that disbursement could be made towards the secrrred and unsecured creditors of the company from the sale proceeds receired after selling out all the moveable and immoveable secured assets of the company on a Pro-rata basis. It is also submitted that the c.o' No. 2060 of 2OO4 filed by the IcIcI Bank against the order dated 29th June, 2OO4 passed by this Ld Tribunal recalling its earlier order in terms of disbursement was dismissed on 20 08 2019' It is also submitted that in view of such dismissal of the said C'O r\'lo' 2060 of 2OO4 by an order dated 29th ]une, 2004, passed by this Ld' Tribunal' stands revived and as such, it is submitted that ICICI Bank ns well as IDBI Bank or any other Bank and/or financial institution be directed to n:fund the amount received by them (Rs. 2.5 crores each) against their un'iertaking submitted before this Ld Tribunal with accrued interest forthwith to the L4.

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/ Registry of this Ld Tribunal with up to date interest on the said ar'lount for enabling this Ld Tribunal to accumulate the entire amount and disbJrse lt to the respective secured and unsecured creditors. It is further pr?yed that accordingly, the respective Origlnal Appllcations filed by the respective Banks lncluding the applicant herein be also dlsposed of and accordingly certificate be issued in favour of the respective secured creditors.

18. During the pendency of the case, the 75 workers of Bangalore Unit (,f Grapco Industries Ltd. (In Liquldation) have filed their written submissions on 17th December, 2019 before this Tribunal and prayed this Tribunal to implead them as partles to the instant proceedings and submit their adjudicated claim for Rs.16,99,398.00 and Rs.42,72,855.00 respectlvely.

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20. Initially the workers had approached the Hon'ble High Court W.P. No.46216-46217 of 2002 dated 28.07.2003 filed by the permission was given to approach this Tribunal, Accordingly, was tlled. at Kanlataka in Work€rs where the al)plication The official liquidator has filed his report dated 9s March, 2020. Ar; per the repoft the claim of workers are yet to be invited. The offlcial ,iquidator further claims that he has no funds of the Company i.e. defenda lt no. 1, which is in liquidation, in his hand to invite claims. The official liquirlator has prayed for deposit of a sum of Rs. 3,00,000/- with his office for publlcation of notices in newspapers in accordance with Companies (Court) Rules, 1959. In view of thi:i the official liquidator's report is taken on record. The provisions of Section 19, Sub-Section 19 of the Recovery of Debts and 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 liquid.ttion, the Tribunal may by an order direct that the sale proceeds of secured assets of such company be distributed in the same manner as provided in se':tion i26 of the Companies Act, 2O1i or under any other law for the time being in force.l"

21. This Tribunal has passed the Order on 22nd February, 2O2O in TA l,lo. 04 of 2012 directing the official liquidator attached with the High Court (lf Orissa, Cuttack of this Company in liquidation which is defendant No. 1 to flle a repoft along with adjudicated claim of the workers, if so invited along with their Iist and amount. The applicant by oral and documentary evidence has established its case. The documentary evidence comprises from Annexure/Exhil)it-A to Annexure/Exhibit-A-20, which are available in paper book flled by the applicant bank. From the perusal of the documents referred above and the certifierj copy of the statement of account, nhich is filed as Annexure/Exhibit-A to !-20, it is established that the defendants had availed the financial facilities from the applicant bank and had withdrawn the amount through the account. From the perusal of the Statement of Account which is Annexure/E:xhibit-A- 20, the total outstanding comes to Rs. 3,18,17,603.15 which the applicant is entitled to recover from the defendants no.1. In view of the above discussion and after considering the entire casl 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. 3,18,17,603.15 from the defendants no.1 who is liable for the same. The appllcant balrk shall also be entitled to pendentelite and future interest on the said amount @ 18o/o per annum with simple from the date of filing of the Original Applicati( n till the date of realization,

ORDER

T.A. No. 02 of 2014 filed by the Applicant Bank is allowed and debt is determined with cost against the defendant no.1. It is hereby ordered that applicant bank is entitled to recover from the defendants the total amount to the tune of Rs. 3,18,17,603.15 (Rupees three crores eighteen lakhs seventeen thousands six hundred three and paise fifteen only) with pendentelite a1d future interest @ 18o/o per annum with simple on the amount 'lue from

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24. o- the date of filing of the Transfer Application, i.e. 16.10.1997 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. Amount, if any, paid by the defendants in the loan account or amount, if any, recovered by the Applicant Bank after filing of the T.A. the same be taken into account while arriving at the exact amount of dues/debt payable by the defendants. Accordingly, pendentelite and future interest shall be calculated on the reduced amount. 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 offlcial liquidator attached with the High Court of Orissa at Cuttack for inviting the claims of the workers. The petition 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 liquidation) as and when he will invite the claims of the workers. The official liquidator after adjudication of claims is entitled to receive the amount. 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 la\4, 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 fail 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.

(s) O\

(7) 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 Certificate.

(8) Ld. Recovery Officer shall realize the amount as per the Recovery certificate from the defendants in accordance with law.

(9) Ld. Registrar of this Tribunal ls 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 19 (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. Accordingly, the Original Application being T.A. No. 02 of 2014 is allowed and stands disposed of. Copy of the Judgement/Final Order be upload in the Trlbunal's website. File is consigned to the Record Room. !,.i; :""i:i,';, ili li i,. x"Ji,f Ii1"3 ",,?'" ", l il;n " iffiq ii!r$se' :,.fr A'x-e}^s'^}zt; ( ANIL KUMAR CHATURVEDI ) PRESIDING OFFICER,