WEST BENGAL GRAMIN BANK vs M/S Shiv Shankar Hotel And Ors. on 26 February 2020

J U D G M E N T

(Delivered on 26^th February 2020)

The Applicant is a body corporation constituted under the Regional Rural Bank's Act, 1976, having its Head Office at Sunity Road, Coochbehar – 736101 and Branch Office amongst other places one at Aurobindo Road, Hakimpara, Siliguri, known as 'SILIGURI BRANCH', District Darjeeling.

The facts in brief, giving rise to the present application as pleaded are as under.

The defendants No. 2 to 4 as partners of the defendant No.1 applied to the applicant bank for financial assistance vide application dated 5/5/2005 and the applicant bank on 7/5/2005 sanctioned the cash credit facility upto the limit of Rs. 4,00,000.00 in favour of the defendant No.1 vide Sanction Letter dated 7/5/2005.

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In compliance with the terms and conditions of the said sanction, the defendants No. 2 to 4, partners of the defendant No.1 on 7/5/2005 executed the documents of Demand Promissory Note for Rs. 4,00,000/-, Letter of Continuity and Letter of Hypothecation to Secure Demand Cash Credit against Goods in favour of the applicant bank.

The defendants No. 5 & 6 in their personal capacity stood as guarantors and executed Letter of Guarantee dated 7/5/2005.

In view of the further application of the defendants No. 2 to 4 as partners of the defendant No.1 contained in the application dated 25/7/2006 for enhancement of the said Cash Credit Facility upto the limit of Rs. 9.00 lakhs from Rs. 4.00 lakhs, the applicant on 26/7/2006 sanctioned/enhanced the Cash Credit Facility upto the limit of Rs. 9.00 lakhs from Rs. 4.00 lakhs in favour of the defendant No.1 vide Sanction Letter dated 26/7/2005.

In compliance with the terms and conditions of the said sanction in respect of the said cash credit facility upto the limit of Rs. 9.00 lakhs, the defendants No. 2 to 4, partners of the defendant No.1 on 26/7/2006 executed the documents of Letter of Agreeing variation of interest rate, Letter of Continuity, Letter of Hypothecation to Secure Demand Cash Credit against Goods, Agreement and Assignment of LIC Policy in favour of the applicant bank.

The defendants No. 5 & 6 in their personal capacity stood as guarantors and the said guarantee is contained in a Form of Guarantee For Advances and Credits Generally dated 27/7/2006.

It is the contention of the applicant bank that after avilment of the loan facilities, the Loan Account became most irregular and despite requests and reminders, the defendants failed and neglected to keep regularized the said accounts and defaulted to repay the dues of the said loan accounts as per terms and conditions thereof.

The Applicant Bank through its advocate issued Demand Notice dated 20/2/2014 under registered post with A/D upon the defendants and demanded a sum of Rs.13,61,176.00 with interest calculated upto 30/09/2013.

The applicant bank stated that the defendant No.1 frequently made some deposits in the said loan account and the last payment of Rs. 10,000/- was made on 12/7/2013 in the loan account.

The applicant bank stated that the rate of interest in respect of the aforesaid account varied from time to time and the present rate of interest in respect of the said loan is @15%

Siliguri (Contd...)

per annum with monthly rests and the applicant prays for further interest @15% per annum with monthly rests in respect of the said loan account from 1/2/2014 till realization.

According to the applicant bank, after giving credit for all sum of moneys paid by and on behalf of the defendant in the said loan account there becomes due from the defendants to the Applicant Bank altogether a sum of Rs.14,31,295.00 only with interest calculated upto 31/01/2014 and further interest from 01.02.2014 @15% per annum with monthly rests for the said loan till realization of the entire balance.

The defendants through their counsel appeared and filed the written statement against the claim of the applicant bank, stating inter-alia that the application is barred by the limitation and the applicant bank has no locus-standi to file the application. Further the applicant bank has no cause of action to file the said application.

The defendants have taken the plea that the defendants No. 5 & 6 have no relation with the hotel business and they have no knowledge of any sort of guarantee they have made before the applicant bank against the loan sanctioned to the defendants No. 2 to 4 for their partnership business.

The defendants raised the contention that the applicant bank did not intimate the defendants about the irregularity of the account before the Lawyer's notice dated 20/2/2014. According to the defendants, the statement of account is not correct and the claim of the applicant bank is an exaggerated one and the defendants are not liable to make the said payment.

It is the contention of the defendants that the applicant bank has filed the present application by suppressing the material facts and the documents/ annexures filed by the applicant is disputed.

In view of the above, the defendants prayed that the application may be dismissed with cost.

The Applicant Bank in support of its case has filed evidence by way of affidavit as affirmed by Sri. Pradip Kumar Saha, the Br. Manager of the Applicant Bank and also relied upon the following documents:- <table border="1"> <thead> <tr> <th>Sl. No.</th> <th>Name of the documents (photocopy)</th> <th>Exhibit No.</th> </tr> </thead> <tbody> <tr> <td>1.</td> <td>Application dated 5/5/2005</td> <td>1</td> </tr> <tr> <td>2.</td> <td>Sanction Letter dated 7/5/2005</td> <td>2</td> </tr> <tr> <td>3.</td> <td>Demand Promissory Note dated 7/5/2005</td> <td>3</td> </tr> </tbody> </table>

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<table border="1"> <tr> <td>4.</td> <td>Letter of Continuity dated 7/5/2005</td> <td>4</td> </tr> <tr> <td>5.</td> <td>Letter of Hypothecation to secure Demand Cash Credit against Goods dated 7/5/2005</td> <td>5</td> </tr> <tr> <td>6.</td> <td>Letter of Guarantee dated 7/5/2005</td> <td>6</td> </tr> <tr> <td>7.</td> <td>Application dated 25/7/2006</td> <td>7</td> </tr> <tr> <td>8.</td> <td>Sanction Letter dated 26/7/2006</td> <td>8</td> </tr> <tr> <td>9.</td> <td>Letter of Agreeing Variation of Interest Rate for Rs. 9.00 lakhs dated 26/7/2006</td> <td>9</td> </tr> <tr> <td>10.</td> <td>Letter of Continuity for Rs. 9.00 lakhs dated 26/7/2006</td> <td>10</td> </tr> <tr> <td>11.</td> <td>Letter of Hypothecation to Secure Demand Cash Credit Against Goods dated 26/7/2006</td> <td>11</td> </tr> <tr> <td>12.</td> <td>Agreement for Rs. 9.00 lakhs dated 26/7/2006</td> <td>12</td> </tr> <tr> <td>13.</td> <td>Form of Guarantee for Advances and Credits Generally dated 27/7/2006</td> <td>13</td> </tr> <tr> <td>14.</td> <td>Demand Notices dated 20/2/2014 along with connected postal receipts and A/D cards</td> <td>14 to 27</td> </tr> <tr> <td>15.</td> <td>Statement of account.</td> <td>28</td> </tr> </table>

Heard the learned counsel for the applicant bank who prayed for issuance of Recovery Certificate against the defendants as per pleadings made in the Application, supported by evidence on affidavit of their witness who affirmed on oath the execution of the security and other documents by the defendants and also execution of their own documents relied upon, which have been marked exhibits. It is pertinent to mention here that the defendants did not appear before the Tribunal on the date of final hearing.

I have carefully perused the documents on record including original application, evidence on affidavit and exhibited documents as well as written statement filed by the defendants.

The defendants have taken the plea that the application is barred by the limitation and the applicant bank has no locus-standi to file the application. Further, the applicant bank has no cause of action to file the said application.

From the documents filed by the applicant bank it transpires that the applicant has sufficient cause of action for filing the instant application due to disbursement/availment of loan to/by the defendants and on default in repayment of the loan by the defendants, inspite of the demands made. It is also found that the claim is within the period of limitation. Therefore, there is no force in the above contentions of the defendants.

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The further contention of the defendants is that the defendants No. 5 & 6 have no relation with the hotel business and they have no knowledge of any sort of guarantee they have made before the applicant bank against the loan sanctioned to the defendants No. 2 to 4 for their partnership business.

Per contra, the applicant bank has rebutted this statement by filing Letter of Guarantee dated 7/5/2005 (Exbt. No. 6) and Form of Guarantee for Advances and Credits Generally dated 27/7/2006 (Exbt. No.13) executed by the defendants No. 5 & 6.

The defendants have raised another allegation that the statement of account is not correct and the claim of the applicant bank is an exaggerated one and the defendants are not liable to make the said payment.

It is observed that the applicant bank has filed the statement of account, which is maintained in the Bank in the Books of the Bank in the usual and ordinary course of business and is admissible as per Section 4 of the Banker's Books of Evidence Act. Moreover, the defendants have failed to show/pin-point about any particular entry which is wrong or which should not have been there. In the absence of the same, the contention of the defendants has no force.

The other contentions raised by the defendants in the written statement are very vague and bald and they do not deserve any consideration of the Tribunal.

The documents executed by the principal borrower from time to time are duly proved by the applicant bank and the witness of the applicant.

Considering the unchallenged/ unrebutted version of applicant's witness and all the documents marked as exhibits, including duly certified copy of the statement of account maintained by the applicant Bank in its regular course of business, I hold that the applicant is entitled to get the Recovery Certificate as prayed for.

In the result I pass the following order :

ORDER

T.O.A. No. 150/2017 arising out of O.A. No. 370/2014 filed by the Applicant Bank is allowed against the defendants No. 1, 2, 3, 4, 5 & 6 jointly and severally and it is hereby ordered that the Applicant Bank is entitled to recover from the above said defendants the total debt amount for Rs. 14,31,295.00 (Rupees fourteen lakhs thirty one thousand two

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hundred and ninety five) only with further interest @10.00% p.a. with quarterly rests from the date of filing of the application till realization of entire balance.

Amount, if any, paid by the defendants in the loan accounts or amount recovered by the applicant bank, if any, made towards the loan accounts after filing of the O.A be taken into account while arriving at the exact amount of outstanding payable by the defendants.

The hypothecated properties, being stock-in-trade, all plants and machineries, tools, furniture and fixtures, book debts etc. lying at M/s Shiv Shankar Hotel (the defendant No.1) situated at Bidhan Road, Siliguri, Post Office and Police Station – Siliguri, District-Darjeeling, West Bengal, as mentioned in Schedule-X of the application, and LIC Policy bearing No. 45171737 (maturity value Rs. 4,00,000/-), standing in the name of Sri. Nagendra Sha, shall remain charged to the Applicant Bank and the Applicant Bank shall have paramount charge thereon.

The defendants are debarred from transferring; alienating, encumbering or disposing of the hypothecated/mortgaged properties or any other property and assets belonging to the defendants till the aforesaid adjudicated debt amount is recovered from the defendants.

The defendants are given a time of thirty days from the date of this judgment/final order for repayment of the above mentioned dues, so initiated to them. In case of failure of said defendants to pay the dues within the time as aforesaid, the Applicant Bank is entitled to recover its dues by sale of the hypothecated/mortgaged property as aforesaid and is also entitled to proceed against the said defendants personally and/or personal properties to recover the dues in accordance with law.

Let the certificate of Recovery be drawn up by the Learned Registrar forthwith in terms of judgment for issuance of the same against the defendants in favour of Applicant Bank under Sub-Section 7 and 22 of Section-19 of The Recovery of Debts and Bankruptcy Act, 1993 and put up the same for signature for issuance.

This judgment is signed and pronounced in the open Tribunal on this day the 26^th day of February, 2020.

Copy of the judgment/final order be given/sent to the parties.

**(D.S. MAHRA)** **Presiding Officer** **DRT, Siliguri.**

Siliguri