CANARA BANK vs GRAPCO INDUSTRIES LTD AND ORS on 28 September 2020

1. Graoco Industries Ltd. "ot"t Tower", 14th Ftoor 32, J L Nehiu Road, 1sth Floor Calcutta-700071

2. Shri R. P. lhunjhunwala (DECEASED), 28, Hastings Park Road, calcutta - 700 027 . 2(a). Smt. Sushella Jhunjhunwala, Widow and Legal Heir of Late R. P. Jhunjhunwala, 28, Hastings Park Road, calcutta - 700 027 . 2(b). shri Abhishek lhunjhunwala, Son and Legal Heir of Late R.P. lhunjhunwala, 28, Hastings Park Road, Calcutta - 700 027 ' 2fc), Ms. Neha Jhunjhunwala, Dauqhter and Legal Heir of Late R.P. Jhunjhunwala, 28, Hastings Park Road, calcutta - 700 o?7 '

3. Industrial Credit & lnvestment Corporation 163, BackbaY Reclamation Mumbai-400020 AND 2b, Gorkey Terrace, Kolkata- 17 of India Ltd., state Bank of India, Overseas Branch, 33A, I L Nehru Road, Calcutta - 70O 071.

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5. United Bank of India Overseas Branch Hemanta basu Sarani calcutta - 700 001.

6. Alla habad Bank Netaji Subhash Road Calcutta-700001

7. State Bank of Hyderabad Burra Bazaar Branch 39,KKTagoreStreet calcutta - 700007

8. Bank of Baroda International Branch "Ruby House" 18, India Exchange Place Calcutta-700001 ... Defendants' Counsel for the Applicant Bank No.1: - " Shri U K Goswami Counsel for the Defendant No.1:- None' Counsel for the Defendant No.2:- " None' Counsel for the Defendants No.2(a) to 2(c):- " None' Counsel for the Defendant No.3:- None Counsel for the Defendant No.4:- Ms' Poetry Dutta' Counsel for the Defendant No.s:- None Counsel for the Defendant No.6:- None Counsel for the Receivers:- Shri N Mishra' ]UDGEMENT

1. This is a Transfer Applicatlon under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act' 1993 initiated by the applicant bank against the defend a nts/ respond e nts no 1 and 2(a)' D

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4. 2(b) and 2(c) praying for issuance of Recovery Certificate to the tune of Rs.44,23,655,46 together with interest, 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 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'3 to 8 hold pari pasu charge with the applicant in the immovable and movable properties of the defendant No. 1. The original defendant No.z, 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 legal heirs and representatives of the deceased defendant No.2, R. P. lhunjhunwala' At the request of the defendant No 1, the applicant bank from time to time sanctioned, granted and disbursed various loans as stated hereinafter to and in favour of the defendant no 1' wherein the defendant No.2 stood as guarantor' The defendant no. 1 on or about 1sth of November' 1989 approached the applicant bank for credit facilities inter alia in a Term Loan Account withalimitofRs.lo2.SllakhsandinaPackingcreditAccountwitha limit of Rs. 75 lakhs. The said facilities were granted by the appllcant bankinfavourofthedefendantno.lagainstthepersonalguarantee of the defendant no' 2 and first charge of moveable property of any kind including all moveable plant and machinery and immovable properties of the defendant no 1 situate at Somnathpur' Balasore' Orissa by way of joint mortgage with the defendants nos' 3 to 7' ToavaitoftheaforesaidcreditfacilityinthesaidTermLoanAccount thedefendantno'1executedapersonalguaranteeon18.05.1990in favouroftheapPlicantbankandalsoaDeedofHypothecationon 18.05.1990 in favour of the applicant'

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9. B, To collaterally secure the aforesaid advances the defendant no. 1 on 9rh September, 1991 created a joint mortgage in favour of the applicant bank jointly with the defendant no. 3 to I by deposit of the Title Deeds relating to its moveable properties situated at Balasore, Orissa. In terms of the Loan Agreement, the defendant No.1 was required to repay the principal amount of the Loan and pay interest thereon in accordance with the repayment schedule contained in the Loan Agreement. The defendant No.1 failed and neglected to make payment to the applicant of the installment of principal, interest and other charges. In view of the failure on the part of the defendant no. 1 and/or the defendant no. 1 & 2 to liquidate the dues with the applicant bank in the aforesaid credit facility in spite of repeated requests and reminders, the applicant bank was compelled to call up the said loan through its advocate's letter dated 14th July, 1998. After giving credit for all sums of moneys paid by and / or realized on behalf of the defendant no. 1 and after adjustment there became due from defendant no. 1 and 2 to the applicant bank a sum of Rs. 44,23,655.46 inclusive of interest calculated up to 15th July, 1998. The applicant bank is entitled to pendentelite and future interest on the said sum @ 18.11olo per annum with simple from the date of filing of the Original Application till the date of realization. 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 filed their show cause reply. The remaining defendants had appeared through their resPective Counsels.

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12. I have perused the relevant documents/materials available on the record. 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) Wh€ther the claim of the applicant ls within time ? (ii) Whether the defendants had utilized the loan facillties granted by the bank ? (iii) whether the defendants are liable to the amount due to the applicant or not ? During the pendency of the matter, the applicant bank i.e. Canara Bank has filed a note submltting that it ls aPparent from the report filed by the loint Receivers on the point of disbursement made by them towards the secured and unsecured creditors of the (:ompany from the sale proceeds received after selling out all the moveable and immoveable secured assets of the company that the dues of the other respective creditors are yet to be made. It is also submitted that the c.o. No. Bank against the order dated 29th Tribunal recalling its earlier order dismissed on 20.08.2019. 2060 of 2004 filed bY the ICICI June, 2004 Passed bY this Ld in terms of disbursement is

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15. It is also submitted that in view of such dismissal of the said C'O' No' 2060 of 2OO4 the order dated 29th June, 2004, being Order No' 92 passed by this Ld. Tribunal, stands revived and as such, it is submitted that ICICI Bank as well as IDBI Bank or any other Banl' and/or flnancial institution be directed to refund the amount received by them (Rs. 2.5 crores each) against their undertaking submitted beFore this Ld Tribunal with accrued interest forthwith to the Registry of this Ld Tribunal with up to date interest on the said amount for enabling this Ld Tribunal to accumulate the entire amount and disburse it to the respective secured and unsecured creditors' It ls further prayed that accordingly, the respective Original Applications filed by the respective a Lb. Banks including the accordingly certificate creditors.

applicant herein be also disposed of and be issued in favour of the respective secured Since the defendant no.2 had expired and the defendants no2 (a),2

(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.44,23,655'46 besides interest accrued to it till the date of realization. However, the liabillty 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. Jhunjhunwala and there shall be no personal liability of the defendants no.z (a), 2 (b) and 2 (C)' During the pendency of the case, the 75 workers of Bangalore Unit of Grapco Industrles 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 proceedlngs and submit their adjudicated claim for Rs'16,99,398 00 and Rs.42,72,855.00 resPective. Initially the Karnataka in the Workers Accordingly, workers had approached the Hon'ble High court at w.P. No.46216-46217 of 2oo2 dated 28'07'2003 filed bv where permission was given to approach this Tribunal' the application was filed t7.

18. lg.ThiSTribunalhaspassedtheorderon22ndFebruary,2020inTANo. 04 of 2072 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' D\

ZO. 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 omcial liquidator further claims that he has no funds of the Company i.e' defendant no. 1, which is 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 omce for publication of notices in newspapers in accordance with Companies (Court) Rules, 1959. In view of this the official liquidator's report is taken on record. The provisions of Section 19, Sub-Sectlon 19 of the Recovery of Debts and Bankruptcy Act, 1993 provides as below : "[(19) Where a ceftificate of recovery is issued against a company as defined under the Cornpanies Act, 2013 and such cofipany is under liquidation, 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 section i26 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-G, which are available in paper book filed by the applicant bank. From the perusal of the documents referred above and the certified copy of the statement of account, which is filed as Annexure/Exhibit-A to G, 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/Exhibit-E, the total outstanding comes to Rs' 44,23,655 '46 which the applicant is entitled to recover from the defendants no' 1 and ,.o

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24. 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.44,23,655 46 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 @ 18 11olo per annum with simple fromthedateoffilingoftheoriginalApplicationtillthedateof realization '

ORDER

T.A. No. 03 of 2012 fited by the Applicant Bank is allowed and debt is determined with cost against the defendants no'1 and 2' It is hereby ordered that applicant bank is entitled to recover from the defendants the total amount to the tune of Rs.44,23,655'46(Rupees forty four lakhs twenty three thousands Slxhundredfiftyfiveandpaisefortysixonly)withpendentelite and future interest @ 18 11olo per annum with simple on the amount due from the date of filing of the Transfer Application' i.e. 16.07.1998 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 llability 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 officlat liquidator is entitled to recelve Rs' 3 lakhs out of the amount lying with the loint Receiver/Registrar of this Tribunal' who is directed to release Rs' 3 lakhs in favour of the official b

(4) The petition of the 75 workers of Bangalore Unit of Grapco Industrles Limited is disposed of with the dlrection to approach the official Iiquidator 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 Trlbunal, 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 liqu idator attached inviting the claims Defendants are with any of the decretal debt is with the High Court of Orissa at Cuttack for of the workers. debarred from disposing, alienating or dealing properties belonging to them till the aforesaid recovered from the defendants'

(s) Defendants are given a time of thirty days from the date of the ludgement/Finat 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' 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' A-

Ld. Recovery Officer shall realize the amount as per the Recovery Certificate from the defendants in accordance with law. Ld. Registrar of this Tribunal is directed to deliver recovery certificate in term of the Rnal order/judgement for recovery of the sum against the defendants in favour of the Applicant Bank under Section 79 (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 03 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.

(e) ( Dictated to Steno, transcribed i#- 1:1"flfi*"P";">ln''n" by him, corrected, signed Virtual Court on this the A'x c""s'*'t ( ANIL KUMAR CHATURVEDi ) PRESIDING OFFICER.