PUNJAB NATIONAL BANK ERSTWHILE UNITED BANK OF INDIA vs Abu Bakkar Sheikh on 28 May 2020

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

**(Delivered on 28^th May 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, Hemanta Basu Sarani, Kolkata-700 001 and carrying on business, inter-alia, from its Azimgunj Branch, situated at 'Marble House', P.O-Azimganj, District-Murshidabad, Pin-742122, under Police Station-Jiagunj.

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

The defendant as the Proprietor of 'Bhai Bhai Biri & Zarda Factory' requested the Applicant bank for financial assistance to meet the working capital requirement of his business of production of Biri and Zarda and the applicant bank considering his request sanctioned to the defendant the working capital/ cash credit limit of Rs.4,00,000.00 (Rupees Four Lakhs) vide Sanction Letter dated 20/9/2005.

Pursuant to sanction of the cash credit capital limit of Rs.4,00,000.00 (Rupees Four Lakhs) and to avail the same the Cash Credit Account being No.0930250020210

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was opened by the defendant in the name of 'Bhai Bhai Bidi & Zarda Factory', with the Applicant's Azimganj Branch as open, Mutual and Current account.

To secure the working capital limit of Rs 4,00,000.00 (Rupees Four Lakhs); the defendant created mortgage in respect of his immovable property being the land admeasuring about 2 decimal along with structure standing thereon lying under Mouza-Fatejanpur, comprised in Plot Nos.(L.R.) 415, 412, (R.S.) Plot Nos.361 and 364, Khatian No.269, J.L. No.44 within the jurisdiction of Police Station-Jiagunj, in the District of Murshidabad and deposited with the Applicant bank the original title deed being No.213 of 1969 relating to the aforesaid immovable property, particularly described in the SCHEDULE -B of the application. The defendant by executing a letter evidencing deposit of title deed on 6^th June, 2006 confirmed creation of mortgage in the aforesaid manner.

While availing the working capital limit of Rs.4,00,000.00 (Rupees Four Lakhs), the defendant further approached the bank for enhancement of the said limit towards further working capital of his firm and the applicant bank enhanced the working capital limit from Rs.4,00,000.00 (Rupees Four Lakhs) to Rs.7,00,000.00 (Rupees Seven Lakhs) vide Sanction Letter dated 18^th January, 2008.

In consideration of enhancement of the working capital limit from Rs.4,00,000.00 to Rs.7,00,000.00, the defendant executed Demand Promissory Note for an amount of Rs.7,00,000.00, Letter of Continuity, Agreement of Hypothecation, Agreement of Hypothecation of Goods, Agreement of Hypothecation of Plant & Machineries and Agreement of Hypothecation of Debts & Movable Assets all dated 18^th January, 2008 in favour of the applicant bank.

The defendant while enjoying the working capital limit of Rs.7,00,000.00 (Rupees Seven Lakhs) further requested the applicant bank for enhancement of the said limit and the Applicant bank at the said request of the defendant enhanced the working capital limit from Rs.7,00,000.00 to Rs.20,00,000.00, vide Sanction Letter dated 13^th March, 2009.

The defendant in consideration of enhancement of working capital facility upto the limit of Rs.20,00,000.00 (Rupees Twenty Lakhs), as the Proprietor of M/s Bhai Bhai Biri & Zarda Factory executed Demand Promissory Note for an amount of Rs.20,00,000.00, Letter of lien, Letter of Continuity, Letter of Hypothecation of Goods, Letter of

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Hypothecation of movable plant and machinery and Letter of Hypothecation of Debts & Movable Assets all dated 13^th March, 2009 in favour of the applicant bank.

To secure the working capital limit of Rs. 20,00,000.00 (Rupees Twenty Lakhs) the defendant on 22^nd May, 2009 declared that mortgage originally created by the said defendant in respect of his immovable property particularly mentioned in Schedule- B of the application by deposit of title deed with the Applicant bank, would be extended as the continuing security for due repayment of the enhanced working capital limit of Rs.20,00,000.00 (Rupees Twenty Lakhs) along with interest, costs and expenses accrued thereon. To that effect, the defendant executed a Letter in extension of Mortgage on 22^nd May, 2009.

While enjoying the working capital limit of Rs.20,00,000.00 (Rupees Twenty Lakhs) from the Applicant bank, the defendant No.1 has confirmed the correctness of balance of Rs.25,04,983.00 as on 25.03.2011 along with further interest due and payable by the defendant to the Applicant bank.

Again, the defendant requested the Applicant bank to renew the existing credit facility and in consideration of the said request the Applicant renewed the existing credit facilities. The defendant in consideration of said renewal executed a Link/ Revival Letter, Demand Promissory Note, Letter of Lien, Letter of Continuity and Letter of Hypothecation of Goods, all dated 10^th March, 2014 in favour of the applicant bank.

It is the contention of the applicant bank that although the defendant availed the entire cash credit/ working capital limit of Rs.20,00,000.00 (Rupees Twenty Lakhs) but failed to operate the said account as per the terms of sanction reason for which the said cash credit account became irregular in course of time. The Applicant bank on several occasions have requested and reminded the defendant to regularize the account but inspite of all such reminders, the defendant could not feed the overdue amount in the cash credit account reason for which the said account became highly irregular and the accounts were classified as the Non-Performing Asset on and from 31^st May, 2013.

Thereafter, the applicant bank issued Demand Notice on 11^th December, 2015 through its Advocate thereby calling upon the defendant to pay a sum of Rs.40,79,388.81 (Rupees Forty Lakhs Seventy Nine Thousands Three Hundred Eighty Eight and eighty

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one paisa) inclusive of interest calculated upto 10.12.2015 along with further interest @12.65% per annum with monthly rests till realization, within 3(three) days from the date of said notice. Inspite of the said notice, the defendants could not liquidate the dues of the Applicant bank.

After giving due credit to the defendant for all sums paid by or received on behalf of the said defendant there was due and owing by the defendant to the Applicant Bank in the said cash credit account a sum of Rs.40,79,388.81 (Rupees Forty Lakhs Seventy Nine Thousands Three Hundred Eighty Eight and paisa eighty one paisa) inclusive of interest calculated upto 10.12.2015.

The defendant appeared through his counsel but did not file any written statement against the claim of the applicant bank despite grant of sufficient opportunities. Hence, the right of the defendant to file the written statement was closed on 30/01/2019.

The Applicant Bank in support of its case has filed evidence by way of affidavit as affirmed by Sri. Prabhakar Kumar, the Senior 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</th> <th>Exhibit No.</th> </tr> </thead> <tbody> <tr> <td>1.</td> <td>Loan Application and Sanction Letter dated 20.09.2005</td> <td>1</td> </tr> <tr> <td>2.</td> <td>Letter evidencing Deposit of Title Deed dated 06.06.2006</td> <td>2</td> </tr> <tr> <td>3.</td> <td>Title Deed being No.213 of 1969</td> <td>3</td> </tr> <tr> <td>4.</td> <td>Application made by defendant for enhancement</td> <td>4</td> </tr> <tr> <td>5.</td> <td>Sanction Letter dated 18.01.2008</td> <td>5</td> </tr> <tr> <td>6.</td> <td>Demand Promissory Note dated 18^th January, 2008 for an amount of Rs.7,00,000.00</td> <td>6</td> </tr> <tr> <td>7.</td> <td>Letter of Continuity dated 18^th January, 2008</td> <td>7</td> </tr> <tr> <td>8.</td> <td>Agreement of Hypothecation dated 18^th January, 2008</td> <td>8</td> </tr> <tr> <td>9.</td> <td>Agreement of Hypothecation of Goods dated 18^th January, 2008</td> <td>9</td> </tr> <tr> <td>10.</td> <td>Agreement of Hypothecation of Plant &amp; Machineries dated 18^th January, 2008</td> <td>10</td> </tr> <tr> <td>11.</td> <td>Agreement of Hypothecation of Debts &amp; Movable Assets dated 18^th January, 2008</td> <td>11</td> </tr> <tr> <td>12.</td> <td>Loan application and Sanction Letter dated 13.03.2009</td> <td>12</td> </tr> <tr> <td>13.</td> <td>Demand Promissory Note dated 13^th March, 2009 for an amount of Rs.20,00,000.00</td> <td>13</td> </tr> <tr> <td>14.</td> <td>Letter of lien dated 13^th March, 2009</td> <td>14</td> </tr> <tr> <td>15.</td> <td>Letter of Continuity dated 13^th March, 2009</td> <td>15</td> </tr> <tr> <td>16.</td> <td>Letter of Hypothecation of Goods dated 13^th March, 2009</td> <td>16</td> </tr> </tbody> </table>

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<table border="1"> <tr> <td>17.</td> <td>Letter of Hypothecation of movable plant and machinery dated 13^th March, 2009</td> <td>17</td> </tr> <tr> <td>18.</td> <td>Letter of Hypothecation of Debts &amp; Movable Assets dated 13^th March, 2009</td> <td>18</td> </tr> <tr> <td>19.</td> <td>Letter of Extension of Mortgage dated 22.05.2009 along with the copy of Letter of Lalbagh Branch Applicant bank dated 22.05.2009</td> <td>19</td> </tr> <tr> <td>20.</td> <td>Balance Confirmation Letter dated 25.03.2011</td> <td>20</td> </tr> <tr> <td>21.</td> <td>A Link/ Revival Letter dated 10^th March, 2014</td> <td>21</td> </tr> <tr> <td>22.</td> <td>Demand Promissory Note dated 10^th March, 2014</td> <td>22</td> </tr> <tr> <td>23.</td> <td>Letter of Lien dated 10^th March, 2014</td> <td>23</td> </tr> <tr> <td>24.</td> <td>Letter of Continuity dated 10^th March, 2014</td> <td>24</td> </tr> <tr> <td>25.</td> <td>Letter of Hypothecation of Goods dated 10^th March, 2014</td> <td>25</td> </tr> <tr> <td>26.</td> <td>Demand notice dated 11.12.2015 along with postal receipts</td> <td>26</td> </tr> <tr> <td>27.</td> <td>Statement of Account</td> <td>27</td> </tr> </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 i.e. defendant 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 defendant. In the present matter the defendant has 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 defendant and on default in repayment of the loan by the defendant, in spite of demands made, as per exhibited documents filed by the applicant bank.

In the above circumstances, it is ordered:

ORDER

T.O.A. No. 960/2017 arising out of O.A. No. 599/2015 filed by the Applicant Bank is allowed against the sole defendant and it is hereby ordered that the Applicant Bank is entitled to recover from the above said defendant the total debt amount for Rs.40,79,388.81p (Rupees Forty Lakhs Seventy Nine Thousands Three Hundred Eighty Eight and paisa

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eighty one paisa) only with further interest thereon @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 defendant in the loan account 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 defendant.

The hypothecated properties being (i) stocks consisting of various types of biri and zarda, including all the finished and semi-finished products, whether raw or in process of manufacture and all products, goods and movable property of any kind including all the documents of title to the goods and other assets stored or to be stored at the business place of the defendant situated at Village-Baroduary, P.O-Azimganj, District-Murshidabad, Pin- 742122, or elsewhere or in transit, belonging to the proprietorship firm of the said defendant as well the book debts and receivables of the said Firm (ii) all that Plant, machineries, engines, boilers, appliances, tools and implements brought in or stored or to be stored at the business place of the defendant situated at Village-Baroduary, P.O-Azimganj, District-Murshidabad, Pin- 742122, or wherever else including all the plant and machineries in course of transit, belonging to the proprietorship firm of the said defendant [as mentioned in the Schedule of the original application] and the mortgaged property being all that Land admeasuring about 2 Decimals along with the structure standing thereon, lying and situated under Mouza- Fatejanpur, comprised in R.S. Plot Nos. 361 & 364, appertaining to L.R. Plot Nos. 412 and 415, appertaining to Khatian No. 269, within the ambit of Post Office- Azimganj, Police Station- Jalangi, in the District of Murshidabad, covered by the title deed being No. 213 of 1969, [as mentioned in the Schedule-B of the original application], shall remain charged to the Applicant Bank and the Applicant Bank shall have paramount charge thereon.

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

The defendant is 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 defendant to pay the dues within the time as aforesaid, the Applicant Bank is entitled to

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recover its dues by sale of the hypothecated/mortgaged property as aforesaid and is also entitled to proceed against the said defendant 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 defendant 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 28^th day of May, 2020.

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

(D.S. MAHRA)

DRT, Siliguri.

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