Punjab National Bank Of India vs BASUNDHARA RICE MILL (P) LTD And Others on 16 March 2020

**J U D G M E N T**

**(Delivered on 16^th March 2020)**

The Applicant is a body corporate, constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 having its Head Office at 11, Hemantu Basu Sarani, Kolkata – 700 001 and carrying on Banking business inter alia from its Branch Office at Mackenzie Park, Post Office- Raghunathganj, in the District of Murshidabad, Pin – 742 225, under Police Station – Raghunathganj, commonly known as Raghunathganj Branch.

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

The defendant No.1 is a company within the meaning of the Companies Act, 1956 having its registered office at Kamal Kumari Devi Sarani Haridasnagar, P.O. Raghunathganj, in the District of Murshidabad. The defendants No. 2 & 3 are the Directors of the defendant No.1 company as well as the legal heirs of Partha Sarathi Nath (since deceased), who was also the Director of the defendant No.1 company.

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The defendant No.1 company applied to the applicant bank for grant of a cash credit facility as working capital for its rice mill unit and in consideration of the application of the defendant No.1, the applicant bank sanctioned a Cash Credit Limit of Rs.7,00,00,000.00 in favour of the defendant No.1 vide Sanction Letter dated 18/7/2009.

In compliance with the terms and conditions of the sanction, the defendant No.1 company on 29/7/2009 executed Demand Promissory Note, Letter of Lien, Letter of Continuity, Hypothecation of Moveable Plant & Machineries and Hypothecation of Debts & Movable Assets in favour of the applicant bank.

To secure the cash credit limit of Rs. 7.00 crores, the defendants No. 2 & 3 along with Partha Sarathi Nath (since deceased) stood as a guarantors and a Letter of Guarantee was jointly executed by the said defendants No. 2 & 3 along with Partha Sarathi Nath (since deceased) on 29/7/2009.

In addition to the above, the defendant No.2 created an equitable mortgage in respect of his immovable property being the land admeasuring about 431 sataks along with building standing thereon, lying and situated under Mouza-3 No. Gadaipur, J.L. No. 03, at Plot Nos. 615, 621 and 628 appertaining to Khatian Nos. L.R. 371, 628 and R.S. 195, Sub-Registry Office-Jangipur, Police Station – Raghunathganj, in the District of Murshidabad, particularly mentioned in the Schedule-B of the application and to create the mortgage deposited the original title deed being No. 919 of 1996 relating to the aforesaid property.

The defendant No. 2 created equitable mortgage over his immovable property being the land admeasuring about 29 Decimals along with structure standing thereon, lying and situated under Mouza – Sonatikuri, J.L. No. 04, at Plot No. 603, appertaining to Khatian No. 315, in the District of Murshidabad, particularly mentioned in the Schedule-C to the application and deposited the original title deed being No. 9258 of 1990 relating to the aforesaid property.

In addition to the above, the defendant No. 3 created equitable mortgage over her immovable property being the land admeasuring about 32 Decimals along with structure standing thereon, lying and situated under Mouza – Sonatikuri, J.L. No. 04, Plot No. 598, appertaining to Khatian No. R.S. 381, in the District of Murshidabad, particularly mentioned in the Schedule-D of the application and deposited the original title deed being No. 1885 of 1981 relating to the aforesaid property.

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The defendant No. 3 also created equitable mortgage over the separate plots of land each admeasuring about 38¾ sataks along with structure standing thereon, lying and situated under Mouza-Balighata, J.L. No. 05, Touzi No. 70, Plot No. 550 appertaining to Khatian No. 75, in the District of Murshidabad, particularly mentioned in the Schedule-E of the application and deposited the original title deeds being No. 8885, 8886, 8887 and 8888 of 1981 relating to the aforesaid property.

The defendant No.3 created equitable mortgage over her another property being the land admeasuring about 141/7 decimals along with structure standing thereon, lying and situated under Mouza -95, Basudevpur, Touzi No.70, Khatian No. 602, Dag No. 25/265, J.L. No. 95, within the ambit of Sub-Registry Office – Jangipur, under Police Station – Raghunathganj, in the District of Murshidabad, particularly mentioned in the Schedule-F of the application and deposited the original title deed being No. 6026 of 1978 relating to the aforesaid property.

Apart from the above, Partha Sarathi Nath (since deceased) also created equitable mortgage over his immovable properties being three separate plots of land admeasuring about 50 Decimals in Plot No. 574 corresponding to Khatian No. 621, land admeasuring about 39 Decimals corresponding to Plot No. 581, land admeasuring about 56 sataks corresponding to Dag No. 578 and Khatian No. 597 lying and situated under Mouza-Sonatikuri, in the District of Murshidabad, particularly mentioned in the Schedule-G of the application and on 30/10/2009 deposited the original title deed being Nos. 4817 of 2003 and 8654 of 1985 relating to the aforesaid properties.

The defendants No. 2 & 3 and Partha Sarathi Nath (since deceased) jointly executed the Letter evidencing deposit of title deed on 30/10/2009 and confirmed the creation of mortgage over the Schedule-B, C, D, E, F & G properties by deposit of the respective title deeds relating to the said properties.

The defendant No.1 has hypothecated its entire stocks-in-trade, movable plant and machineries as well as the book debts in favour of the applicant bank by way of first charge. The extension of charges over the movable properties of the defendant No.1 company has been registered with the Registrar of Companies, West Bengal.

While enjoying the cash credit limit of Rs. 7.00 crores, the defendant No.1 company further requested the applicant bank for enhancement of the cash credit limit for manufacturing of rice, rice bran etc. in its rice mill unit. Considering the request of the defendant No.1

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company, the applicant bank enhanced the cash credit limit from Rs. 7.00 crores to Rs. 9.00 crores vide Sanction Letter dated 25/8/2010.

In consideration of the sanction of overall limit of Rs. 9.00 crores, the defendant No.1 company through its Directors have executed Demand Promissory Note, Letter of Lien, Letter of Continuity, Agreement of Hypothecation of Goods, Agreement of Hypothecation of Movable Plant & Machineries, Agreement of Hypothecation of Debts & Moveable Assets, all dated 7/9/2010 in favour of the applicant bank.

To secure the enhanced cash credit limit of Rs. 9.00 crores, the defendants No. 2 & 3 along with Partha Sarathi Nath (since deceased) extended their personal guarantee and Letters of Guarantee were severally executed by the said defendants No. 2 & 3 along with Partha Sarathi Nath (since deceased) on 7/9/2010.

To further secure the enhanced cash credit limit of Rs. 9.00 crores, the defendant No.2 on 7/9/2010 declared that the equitable mortgage over the immovable properties of the said defendant No.2, particularly mentioned in the Schedule-B and C annexed to the application, by deposit of the title deeds on 30/10/2009 shall be extended as the continuing security for repayment of the entire overall limit of Rs. 9.00 crores. To that effect the defendant No. 2 has written the letters in extension of mortgage on 7/9/2010 to the applicant bank.

The defendant No.3 on 7/9/2010 declared that the equitable mortgage over the immovable properties of the said defendant No.3, particularly mentioned in the Schedule-D, E and F annexed to the application, by deposit of the title deeds on 30/10/2009 shall be extended as the continuing security for repayment of the enhanced cash credit limit of Rs. 9.00 crores. To that effect the defendant No. 3 has executed the letter and Memorandum in extension of mortgage on 7/9/2010 to the applicant bank.

Partha Sarathi Nath (since deceased) also on 7/9/2010 declared that the equitable mortgage over his immovable properties, particularly mentioned in the Schedule-G annexed to the application, by deposit of the title deeds on 30/10/2009 shall be extended as the continuing security for repayment of the enhanced cash credit limit of Rs. 9.00 crores. To that effect Partha Sarathi Nath (since deceased) has issued letter in extension of mortgage on 7/9/2010 to the applicant bank.

The defendants No. 2 & 3 along with Partha Sarathi Nath (since deceased) extended the mortgage over their respective immovable properties. The said extension of equitable

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mortgage over the immovable properties of the defendants No. 2 & 3 as well of Partha Sarathi Nath (since deceased) mentioned in the Schedule – B to G have been registered in the mortgage register of the bank.

To secure the enhanced cash credit limit of Rs. 9.00 crores, the defendant No.1 has extended the hypothecation over its entire stocks-in-trade, movable plant and machineries as well as the book debts in favour of the applicant bank by way of first charge. The extension of charges over the movable properties of the defendant No.1 company has been registered with the Registrar of Companies, West Bengal.

The defendant No.1 company by executing the balance confirmation letters on 31/1/2012 and 31/3/2013 confirmed the correctness of outstanding of Rs. 8,50,33,460.86 as on 30/1/2012 and Rs. 8,92,46,648.75p as on 31/3/2013.

It is the contention of the applicant bank that after availment of loan facility, the defendants failed and neglected to repay the loan in accordance with the terms and conditions on which it was granted. The loan account became irregular and in spite of repeated demands and requests the defendants did not regularize the account, as a result of which, the account of the defendant No.1 company was declared as NPA on 23/9/2013.

Thereafter, the applicant bank through its Advocate issued Demand Notice dated 8/11/2013 to the defendants u/s 13(2) of the SARFAESI Act, 2002. But even after the said demand notice, the defendants failed to liquidate the dues of the applicant bank.

According to the applicant bank, after giving due credit to the loan account of defendants for all sums paid and/or received on behalf of the said defendants, there is now due and owing by the defendants to the Applicant Bank, jointly and severally a sum of Rs.9,97,09,306.21p (Rupees nine crores ninety seven lakhs nine thousand three hundred six and paise twenty one) only inclusive of interest calculated upto 31.01.2015.

Despite the service of summons upon the defendants through speed post as well as by hand delivery, the defendants neither appeared nor filed any written statement against the claim of the applicant bank. Hence, the defendants were ordered to be proceeded ex-parte on 11/9/2018.

The Applicant Bank in support of its case has filed evidence by way of affidavit as affirmed by Sri. Rajib Goswami, the Chief Manager of the Applicant Bank and also relied upon the following documents:-

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<table border="1"> <thead> <tr> <th>Sl. No.</th> <th>Name of the documents</th> <th>Exhibit No.</th> </tr> </thead> <tbody> <tr> <td>1.</td> <td>Loan application and Sanction Letter dated 18/7/2009</td> <td>A</td> </tr> <tr> <td>2.</td> <td>Extract of Minutes of the Board meeting of the defendant No.1</td> <td>B</td> </tr> <tr> <td>3.</td> <td>Demand Promissory Note dated 29/7/2009</td> <td>C</td> </tr> <tr> <td>4.</td> <td>Letter of Lien dated 29/7/2009</td> <td>D</td> </tr> <tr> <td>5.</td> <td>Letter of Continuity dated 29/7/2009</td> <td>E</td> </tr> <tr> <td>6.</td> <td>Hypothecation of Moveable Plant &amp; Machineries dated 29/7/2009</td> <td>F</td> </tr> <tr> <td>7.</td> <td>Hypothecation of Debts &amp; Movable Assets dated 29/7/2009</td> <td>G</td> </tr> <tr> <td>8.</td> <td>Letter of Guarantee dated 29/7/2009</td> <td>H</td> </tr> <tr> <td>9.</td> <td>Title deed being No. 919 of 1996</td> <td>I</td> </tr> <tr> <td>10.</td> <td>Title deed being No. 9258 of 1990</td> <td>J</td> </tr> <tr> <td>11.</td> <td>Title deed being No. 1885 of 1981</td> <td>K</td> </tr> <tr> <td>12.</td> <td>Title deeds being No. 8885, 8886, 8887 and 8888 of 1981</td> <td>L</td> </tr> <tr> <td>13.</td> <td>Title deed being No. 6026 of 1978</td> <td>M</td> </tr> <tr> <td>14.</td> <td>Title deed being Nos. 4817 of 2003 and 8654 of 1985</td> <td>N</td> </tr> <tr> <td>15.</td> <td>Letter dated 30/10/2009 evidencing deposit of title deed</td> <td>O</td> </tr> <tr> <td>16.</td> <td>Form No. 8 showing registration of charges</td> <td>P</td> </tr> <tr> <td>17.</td> <td>Sanction letter dated 25/8/2010</td> <td>Q</td> </tr> <tr> <td>18.</td> <td>Demand Promissory Note dated 7/9/2010</td> <td>R</td> </tr> <tr> <td>19.</td> <td>Letter of Lien dated 7/9/2010</td> <td>S</td> </tr> <tr> <td>20.</td> <td>Letter of Continuity dated 7/9/2010</td> <td>T</td> </tr> <tr> <td>21.</td> <td>Agreement of Hypothecation of Goods dated 7/9/2010</td> <td>U</td> </tr> <tr> <td>22.</td> <td>Agreement of Hypothecation of Movable Plant &amp; Machineries dated 7/9/2010</td> <td>V</td> </tr> <tr> <td>23.</td> <td>Agreement of Hypothecation of Debts &amp; Moveable Assets dated 7/9/2010</td> <td>W</td> </tr> <tr> <td>24.</td> <td>Letter of Guarantee dated 7/9/2010</td> <td>X</td> </tr> <tr> <td>25.</td> <td>Letters dated 7/9/2010 written by the defendant No.2 in extension of mortgage along with Memorandum of Deposit of Title Deeds.</td> <td>Y</td> </tr> <tr> <td>26.</td> <td>Letters dated 7/9/2010 written by the defendant No.3 in extension of mortgage along with Memorandum of Deposit of Title Deeds.</td> <td>Z</td> </tr> <tr> <td>27.</td> <td>Letters dated 7/9/2010 executed by Partha Sarathi Nath (since deceased) in extension of mortgage along with Memorandum of Deposit of Title Deeds.</td> <td>Z/1</td> </tr> <tr> <td>28.</td> <td>Entry made in the Mortgage Register of the applicant bank</td> <td>Z/2</td> </tr> <tr> <td>29.</td> <td>Form No. 8 showing Registration of Charges</td> <td>Z/3</td> </tr> <tr> <td>30.</td> <td>Balance Confirmation Letters dated 31/1/2012 &amp; 31/3/2013</td> <td>Z/4</td> </tr> <tr> <td>31.</td> <td>Notice dated 8/11/2013 along with postal receipts.</td> <td>Z/5</td> </tr> </tbody> </table>

I have heard the learned counsel for applicant bank and perused the documents and Evidence filed by applicant bank. By the said evidence on affidavit, the Applicant bank has proved its claim. It is settled law that an averment which is not denied by the opposite party

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i.e. defendants in the present matter, by way of filing written statement or by producing evidence must be taken by the Tribunal/ Court to have admitted by the defendants. In the present matter the defendants have neither filed written statement nor produced any evidence in their support to challenge the claim of applicant bank.

The claim of the Applicant bank is within the limitation and within the jurisdiction of this Tribunal. 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 demands made, as per exhibited documents filed by the applicant bank.

In the above circumstances, it is ordered:

ORDER

T.O.A. No. 1049/2017 arising out of O.A. No. 183/2015 filed by the Applicant Bank is allowed against the defendants No. 1, 2 & 3 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.9,97,09,306.21p (Rupees nine crores ninety seven lakhs nine thousand three hundred six and paise twenty one) only with further interest thereon @9.00% 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 property being stocks of all kinds of rice, rice bran etc. including products in process and all finished and manufactured products and articles together with all plant and machineries, fixed and current assets, accessories and any other goods, articles, spares, components that are stored or to be stored at the Registered Office of the defendant No.1 company situated at Piyalkunja, Haridasnagar, Kamal Kumari Devi Sarani, Post Office-Raghunathganj, in the District of Murshidabad, West Bengal and elsewhere or in transit and Book Debts outstanding in the books of the defendant No.1 company and mortgaged property being (1) all that land admeasuring about 431 sataks along with building standing thereon, lying and situated under Mouza -3 No. Gadaipur, J.L. No. 03, at Plot Nos. 615, 621 and 628 appertaining to Khatian Nos. L.R. 371, 628 and R.S. 195, Sub-Registry Office-Jangipur, Police Station – Raghunathganj, in the District of Murshidabad, being the subject

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property of original Title Deed No. 919 of 1996 deposited by the defendant No.2 with the applicant bank, as mentioned in the Schedule-B of the application, (2) all that land admeasuring about 29 Decimals along with structure standing thereon, lying and situated under Mouza – Sonatikuri, J.L.No. 04, at Plot No. 603, appertaining to Khatian No. 315, in the District of Murshidabad, being the subject property of the Title Deed being No. 9258 of 1990, as mentioned in Schedule-C of the application, (3) all that land admeasuring about 32 Decimals along with structure standing thereon, lying and situated under Mouza-Sonatikuri, J.L. No. 04, at Plot No. 598, appertaining to Khatian No. R.S. 381, in the District of Murshidabad, being the subject property of the Title Deed being No. 1885 of 1981, as mentioned in the Schedule-D of the application, (4) all that land admeasuring about 177 Decimals along with structure standing thereon, lying and situated under Mouza-Balighata, J.L. No. 05, Touzi No. 70, at Plot No. 550, appertaining to Khatian No. 75, District-Murshidabad, being the subject property of the Title Deed being Nos. 8885, 8886, 8887 and 8888 of 1981, as given in the Schedule-E of the application, (5) all that land admeasuring about 14.14 Decimals along with structure standing thereon, lying and situated under Mouza-95, Basudevpur, Touzi No. 70, Khatian No. 602, Dag No. 25/265, J.L. No. 95, within the ambit of Sub-Registry Office- Jangipur, under Police Station – Raghunathganj, District-Murshidabad, being the subject property of the Title Deed being No. 6026 of 1978, as given in the Schedule-F of the application, (6) all that land admeasuring about 14 Decimals, 16 Decimals and 44 Decimals along with structure standing thereon, lying and situated under Mouza-Sonatikuri, J.L. No.4, at Plot No. 574, appertaining to Khatian Nos. L.R. 621, R.S. 195, Plot No. 581 appertaining to Khatian Nos. L.R. 1045, R.S. 597 and Plot No. 622 appertaining to Khatian Nos. L.R. 609 and R.S. 58, in the District of Murshidabad, being the subject property of the title Deed being Nos. 4817 of 2003 and 8654 of 1985, as given in the Schedule-G of the application, 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

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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 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 16^th day of March, 2020.

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

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

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