IFCI LIMITED vs GRAPCO INDUSTRIES LTD(IN LIQUIDATION) AND ORS on 28 September 2020

Order

t)\2 Order with signature Order pronounced (Vide separate sheets), In the result, T.A. No. 04 of 2012 is allowed with costs. Issue Recovery Certifi cate accordingly. u,ith date an I dat€d Signatu "e of parties whr,n I A-k c W)r,& (A. K.Chaturvedi) Presiding Officer DRT-3,Kolkata

BEFORE THE DEBTS RECOVERY TRIBUNAL-III KOLKATA PRESENT: .SRI ANIL KUMAR CHATURVEDI. PRESIDING OFFICER. T.A. No.04 OF 2012 (Arising out of O.A. No. 300 of 2000) DArE oF DELTVERY oF oRDER :234'3) r^ r '

IFCI Ltd, Chatteriee International Centre 33e, J i Neh., Road (3'd Floor) Calcutta-700071 -Versus-

1. Grapco Industries Ltd., Plot No.4, Som nathpur Industrial Estate, Balasore, Orissa. AND "OM TOWER", 14th Floor, 32 J L Nehru Road, Calcutta-700 71.

2. Shri R. P. Jhunjhunwala (DECEASEO), 28, Hastings Park Road, Calcutta - 70O O27. 2(a). Smt. Sushella Jhunjhunwala, Widow and Legal Heir of Late R. P. Jhunjhunwala, 28, Hastings Park Road, calcutta - 7o0 o27. 2(b). Shri Abhishek lhunjhunwala, Son and Legal Heir of Late R.P. Jhunjhunwala, 28, Hastings Park Road, calcutta - 7O0 027 . 2(c). Ms. Neha J hunjhunwala, Daughter and Legal Heir of Late R.P. Jhunjhunwala, 28, Hastings Park Road, Calcutta - 700 0?7. Counsel for the Applicant Bank : - Counsel for the Defendant No.1:- Applicant Bank. Oefendants. Debasish ChakrabortY None. A. Mr.

Cou nsel for the

Defendant No.2:- ... Counsel for the Defendants No.2(a) to 2(c):- None. None.

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5. ]UDGE14ENT This ls a Transfer Application under Section 19 of the Recovery of Debts Oue to Banks and Financial Institutions Act, 1993 initiated by the applicant bank against the defendants/respondents no.1 and 2(a), 2(b) and 2(c) praying for issuance of Recovery Certificate to the tune of Rs.f3,64,77,601 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 (now in liquidation) duly incorporated under the provisions of The Companies Act, 1956. The defendant No,1 (now in liquidation) 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 legal heirs and representatives of the deceased defendant No.2, R. P. Jhunjhunwala' 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 (now in liquidation)' wherein the defendant No.2 stood as guarantor' Pursuant to an application for financial assistance submitted by the defendant no. l sometlme in October, 1995 the applicant bank issued a letter dated 1't November, 1995 sanctioning a term loan of Rs' 125 lakhs under Equipment Finance Scheme with certain terms and conditions

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6. To avail of the aforesaid credit facility in the said Term Loan Account the defendant no. 1 (now in liquidation) executed a loan agreement on 17.11.1995 in favour of the applicant bank on the following terms and clauses:- (a) The defendant No. 1 agreed and undertook to use the proceeds of the said loan solely for the purpose of purchasing goods and equipments and use them exclusively for the scheme as mentioned in the schedule. The defendant No. 1 further agreed that if it fails to comply with the requirements, it shall, unless IFCI otherwise agrees, immediately repay the loan.

(b) The defendant No. 1 also agreed to pay to IFCI interest on the principal amount of the loan outstanding from time to time quarterly in each year on January 15, April 15, July 15 and october 15 at the rate of 18.5olo per annum plus interest tax as may be applicable from time to time.

(c) The defendant No. 1 also agreed to pay further interest at the 1.05o/o per annum in the event disbursements were made pending creation of final security.

(d) The defendant No. 1 also agreed that ln case of default in payment of installments of principal, interest and other moneys on their respective due dates, the defendant No. 1 shall pay on the defaulted amounts, liquidated damages at the rate of 2,70o/o per annum for the period of default.

(e) The defendant No. 1 also agreed that the loan together with interest, additional interest, further interest, liquidated damages, up-front fee, premia on pre-payment or on redemption, costs, expenses and other moneys whatsoever stipulated in the loan agreement shall be secured by exclusive and first charge by way of hypothecation of equlpments acquired/to be acquired out of the loan by the defendant No. 1 ^

together with all the spares, tools and accessories, present and future.

(f) The defendant No. 1 also agreed to procure irrevocable and unconditional personal guarantee from the defendant No.z herein. The defendant No. 1 also agreed to repay the princiPal amount of the loan in 12 quarterly installments. The fi6t 11 installments were to be of Rs. 10.42 lakhs each and the last installment was to be of Rs. 10.38 lakhs. The first of such installments was payable on 1sth Aprll 1996 and the last of such installments was payable on 15th January, 1999.

7. To collaterally secure the aforesaid advances the defendant no' 1 on 17th November, 1995 hypothecated the whole of equipments together with its spares, tools and other accessories whether installed or not, or whether lying in loose or in case in or about the factories or 90 downs of the defendant No. 1, as and by way of exclusive and first charge to the applicant as security for and be charged with repayment of the above mentioned loan and the repayment of other monies including lnterest due to IFCI under the above mentioned loan agreement'

8. By a deed of Guarantee dated 16th November, 1995 executed by the defendant No.2 in favour of the applicant, the defendant No' 2 u ncond itiona lly, absolutely and irrevocably granted to and agreed with the applicant that in the event of any default on the part of the defendant No, 1 in payment/repayment of the above mentioned loan' interest and other monies mentioned in the said Letter of Intent dated 1't Novenlber, 1995 and the above mentioned Loan agreement or in the event of any default on the part of the defendant No' 1 to comply with or perform any of the terms, conditions and covenants contained in the said loan agreement, the defendant No' 2 shall upon demand a,-

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10. forthwith pay to the applicant without demur all the amounts by the defendant No. 1 to the applicant under the said loan agreement' It was further provided in the said loan agreement that the applicant may act as though the defendant No. 2 was the principal debtor to the applicant. Pursuant to the loan agreement dated 17th November, 1995, in respect of the loan of Rs. 125 lakhs and the securities created in respect, thereof, the applicant disbursed to the defendant No. 1 from time to tlme the sums aggregating Rs. 125 lakhs. On a further request of the defendant No. 1 the applicant issued another sanction letter dated 2"d April, 1996 sanctionlng a term loan of Rs.45O lakhs under the Equipment Finance Scheme on certain terms and conditions. A loan aqreement dated 15th May, 1996 was entered into by and between the applicant and the defendant No. 1, wherein it was agreed that the proceeds of the loan shall be used exclusively for the schenre, failing which, unless IFCI otherwise agrees. the defendant No. 1 shall immediately repay the loan to the IFCI. The defendant No. 1 also agreed to pay the interest on the principal amount of the loan outstanding from time to time quarterly in each year on January 15, April 15, July 15 and october 15 at the rate of 2Oo/o p€r annum plus interest tax as may be apPlicable from time to time. The defendant No. 1 also agreed to pay further interest at the rate of 1.05o/o per annum in the event disbursements were made pending creation of Rnal security. 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 appllcant of the installment of principal, interest and other charges. O.

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13. 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 and issued a demand notlce dated 23'd September, 1997 asking to pay a sum of Rs, 1,49,77 ,277 /- in respect of the first loan and a sum of Rs' 5,85,85,173 in respect of the second loan together with interest and other dues calculated up to 31st August, 1997' By another notice dated 24th November, 1997 sent to defendant No. 2, the applicant invoked the above mentioned personal guarantee given by the defendant No. 2 and called upon to pay the applicant the sum of Rs. 1,49,77,2771- in rcspect of the first loan and a sum of Rs. 5,85,85,fn/- in respect of the second loan together with interest calculated as on 31't August, 1997 In spite of the above mentioned demand notlces, neither the defendant No, 1 nor the defendant No.2 made any effort to rePay the amount to the applicant as mentioned in the notices. 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' !3,64,77,601 inclusive of interest (total principle outstanding = Rs.5,64,58,000/- + total interest = Rs.7,99,63,561/- + total other dues = Rs. 56,040/-) calculated up to 1sth July, 2000 The applicant bank is entitled to pendentelite and future interest on the said sum @ 18.5olo 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 reiief 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. O- L4.

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19. I have perused the relevant documents/materials available on the record. The defendants No.1 and 2 had not contested the case of the appllcant 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 ? (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. IFCI Bank has filed a note submitting that a devastating fire broke out at the then Calcutta Regional Offlce of the applicant at Falrlie Place, Calcutta onTth November, 1998 resulting huge loss as the whole office property including documents were gutted in the fire' Resultantly, they had registered an FIR and public notifications were published In several newspapers. This case was referred to the Board of Industrial and Financial Reconstruction (BIFR) and by an order dated znd June, 2000, BIFR permitted to initiate legal action against the defendant No' 1 and defendant No. 2. In a separate application 75 workers of Bangalore Unit of Grapco Industries Ltd. (In Liquidation) have flled 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 -46217 of 2oo2 dated 28.07.2003 filed by the Worke6 where permisslon was given to approach this Tribunal' Accordingly, the application was filed

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This Tribunal has passed the Order on 22nd February, ZO2O in TA No. 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. The official liquidator has filed his report dated 9th March. 2020. As per the report the claim of workers are yet to be invited. 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 office 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. provlslons of Section 19, Sub-Section 19 of the Recovery of Debts Bankruptcy Act, 1993 provides as below : "[(19) Where a ceftificate of recovery is issued against a company as defined under the Companies Act, 2013 and such company is under liquidation, the Tribunal nay by an ofuer dircct that the sale proceeds of secured assets of such company be distributed in the same fianner as provided in section 326 of the Companies Ad, 2073 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-P, 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 An nexure/Exhibit-A to P, it is established that the defendants had availed the financial facilities from the applicant bank and had withdrawn the amount through the account. The and

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27. From the perusal of the Statement of Account which is Annexu relExh ibit- P, the total outstanding comes to Rs' 13'64'77 '601/' which the appllcant is entitled to recover from the defendants no l and

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28. Since the defendant no.2 had expired and the defendants no'2 (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'13,64,77 ,601/- 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 thev had inherited the estate of Late R P' Jhunjhunwala and there shall be no personal liability of the defendants no 2 (a), 2 (b) and 2 (C)' In view of the above discussion and after considering the entire case records and the documents flled by the applicant, I have no hesitation to hold that the applicant is entitled to recover a sum of Rs' L3,64,77,60U- 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 @ 18.59o per annum with simple from the date of filing of the Original Application till the date of realization.

ORDER

T.A. No. 04 of 2012 flled by the Applicant Bank is allowed and debt is determined with cost against the defendants no'1 and 2(a) to 2(c). It ls hereby ordered that applicant bank is entitled to recover from the defendants the total amount to the tune of Rs. L3,64,77,601/- (Rupees thirteen crores sixty four lakhs seventy sever! thousands six hundred and one only) with pendentelite and future interest @ 18'5o/o per annum with simple on the amount due from the date of flling of the Transfer

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Application, i.e. 03 10.2000 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) 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 official 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. 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 omcial liquldator 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 olficial 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, atienating or dealing with any of the properties belonging to them till the aforesaid decretal debt is recovered from the defendants'

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Defendants are given a time of thirty days from the date of the ludgement/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. Let the Certificate of Recovery be drawn up by Ld. Registrar forthwith ln 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 CertiRcate. 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 dlrected 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 Oebts and Bankruptcy Act, 1993. Accordingly, the Original Application being T.A. No.04 of 2012 is allowed and stands disposed of. Copy of the Judgement/Final Order be upload in the Tribunal! website. File is consigned to the Record Room.

(e) ( Dictated to Steno, transcribed by him, corrected, signed and oronounced bv me in the Virtual Court on this the 2ar'illttlJil or2,\- ) A.!- c-..r",x-^r"a ( ANIL KUMAR CHATURVEDI ) PRESIDING OFFICER