Arcil vs Vastukala Construction P. Ltd. & Ors. on 29 May 2026

JUDGMENT

1. 1. The present Transfer Application No. 577 of 1995 has been originally filed by New Bank of India (later merged with PNB) before the court of the learned Civil Judge (S.D.), Baroda against the Defendant Company and its directors as Special Civil Suit No. 83 of 1991 for recovery of total sum of **Rs. 1,39,56,796.73 ps /- (Rupees: One Crores, Thirty nine Lakhs, Fifty six Thousand, Seven hundred ninety six and Seventy three paise only)** together with further interest thereon @26% per annum with quarterly rests from the date of the filing of suit till date of realization and together with pendentelite all costs, charge, expenses etc. against Defendant Nos. 1 to 11. It was further prayed that a Court Commissioner be appointed for assets as mentioned in Annexure- I (Hypothecated assets), Annexure II (Immovable property Nos. RS 38, 39, 41, 42, 43 and 45 of Mouje Tandalja in Baroda together with all flats, shops and fixtures), Schedule III (List of 40 flats with Bank) and Annexure IV (list of personal properties of Defendants) of the OA.

2. 2. The brief facts of the case as placed before this Tribunal, at the time of hearing, in the light of pleadings are that, the Defendant no. 1 Company, Vastukala Construction Pvt. Ltd. is a company incorporated under the Companies Act, 1956. Sometime in 1984, the company undertook a project for construction of 528 flats on land admeasuring 35,207 sq.mt. situate at Tandalja, outside the municipal limits of Vadodara City named as "Mahabalipuram Project". New Bank of India, a nationalised bank sanctioned a loan of Rs.50 lakhs for construction of flats on the land. The documents were obtained from the company and its directors. New Bank of India was later merged with Punjab National Bank vide G.O.I. notification dated 01.09.1993. Later Punjab National Bank also assigned its debt to ARCIL, hence PNB is Applicant No. 1 and ARCIL is Applicant No. 2 in the present suit.

3. 3. It is submitted that this financial assistance was given for implementation of construction of affordable flats under Urban Land (Ceiling & Regulation) Act and other than the loan of Rs.50 lakhs, New Bank of India also sanctioned housing loans to the employees of Gujarat Electricity Board to the tune of Rs. 120 lakhs on 04.05.1989. Subsequently further loan of Rs.84 lakhs was also granted as housing loan. However, the Defendant Company committed defaults and New Bank of India took possession of 40 flats out of 528 flats for realization of its dues in the year 1989.

4. 4. It is submitted that the Respondent Company was under liquidation in C.P. No. 154/1989 and the Applicant Bank sought permission for filing recovery suit from the Hon'ble High Court of Gujarat in Company Application No. 136/1991 and after obtaining it on 09.08.1991 filed suit in the Court of the Learned Civil Judge (SD) at Baroda as Civil Suit No. 83 of 1992 for recovery of total sum of Rs.1,39,56,796.73/-. However, as per Written Statement filed by the Defendant Company No.1, the

Company Petition No.154/1989 in which Official Liquidator was appointed was later revoked by the Hon'ble High Court of Gujarat as such the Defendant Company No.1 is presently out of liquidation. Further Official Liquidator vide his letter dated 24.04.1995, Ref. No. OL/P/1/368/1996-97 at Ext.R/07 informed that vide order dated 15.07.1993 in Company petition No. 154 of 1989 Official Liquidator has been discharged and the petition has been withdrawn.

5. Applicant has submitted that Loan documents were executed on 04.01.1985 and Mortgage was created on 03.01.1985. Balance and Security confirmation was done by the Borrower Company on 21.07.1985 for Rs.27,18,000.63/-; on 20.05.1987 for Rs.53,93,259.36/- on 23.02.1989 for Rs.73,43,128.88/- and on 21.12.1989 for Rs.86,11,732.98/-. The suit has been filed for claim of Rs.1,39,56,796.73, the break-up for which is as under:- <table border="1"> <tr> <td>Debit balance as per Statement of account upto 27.03.1990</td> <td>Rs.95,50,127.38/-</td> </tr> <tr> <td>Interest from 01.04.1990 till date of suit</td> <td>Rs.43,61,720.35/-</td> </tr> <tr> <td>Misc. cost</td> <td>Rs. 44,949/-</td> </tr> <tr> <td><b>Grand Total</b></td> <td><b>Rs. 1,39,56,796.73/-</b></td> </tr> </table>

6. The records placed before the Tribunal shows that on 22.12.1995 the Defendant Company No. 1 filed vakalatnama for appearance and on 17.09.1994 reply was filed by Defendant No. 1 to 4 against Application of Bank for appointment of receiver. However, Written Statement Cum Counter Affidavit was filed by Defendant No.1 on 10.02.1995. The Counter claim filed by the Defendant is for Rs. 5,72,20,571/- and amount is allegedly an estimated claim of damages for illegal action of the Bank of India of taking possession of 42 blocks in the year 1989 and the affidavit in support of Counter affidavit was filed only on 10.02.2023 at Ext. R/144.

7. It is observed that Written Statement/reply is filed by Defendants beyond the statutory period of 45 days as such In this regard, **Hon'ble Debt Recovery Appellate Tribunal, Mumbai** while dealing with the question that whether DRT is empowered to condone the delay in filing of written statement which is not filed within the time stipulated period in ***Dr. Sandip Ashok Bharude vs. Canara Bank, Misc. Appeal No. 145 of 2023***, vide **its order dated 22.12.2023** has observed that as per Rule 12(1) of Debt Recovery Tribunal (Procedure) Rules, 1993 written statement is to be filed within a period on 30 days which in exceptional cases may be extended not exceeding 15 days. As such beyond the prescribed period of 45 days, Limitation Act has no application before the DRT to condone the delay. Hence the written statement filed beyond the stipulate period cannot be considered by the Tribunal.

1. 8. So far as the Counter Claim is concerned, the same has also been filed beyond the prescribed period of limitation and no application seeking condonation of delay supported by cogent reasons has been filed. A Counter Claim being in the nature of a cross-suit must independently satisfy the law of limitation. Even if the fact be ignored that the Counter Claim was filed without a proper affidavit the undisputed fact admitted in pleadings of both the parties is that the possession of about 40 flats was taken by Bank of India was taken in the year 1989 whereas the Counter Claim has been filed only in the year 1995. A Counter Claim is in the nature of cross suit as such all ingredients of a regular suit has to be satisfied for it to be adjudicated. Merely making a claim in the Written Statement will not make the Counter Claim admissible. As such when cause of action accrued to the Defendant in the year 1989, then the limitation for filing a money suit will be three years, however for reasons best known to defendant they waited till Bank of India filed recovery suit against them and only then Counter Claim was raised in the year 1995. Even the said claim is not supported by any proper document and no explanation has been offered as to how the claim of Bank for entire project for construction of 528 flats is Rs. 1.39 crores, however the loss suffered by Defendants due to possession of 40 flats is to the tune of Rs. 5.72 crores. Defendants have miserably failed to substantiate their claim both on the issue of limitation and the quantum of amount stated in the counter claim.

2. 9. The case has proceeded ex parte due to non-participation of the Defendant in the proceedings vide order dated 25.11.2025. Hence the only remaining issue is the claim of the Applicant.

3. 10. In support of Original Application, Applicant has filed affidavit in support of Suit Claim Exh.A/81 in support of its claim, duly sworn in by Mr. Vinodpuri B. Goswami, Bank Officer dated 26.02.1997. Mr. Gyandendrakumar Jha, Manager of the Applicant Bank verified all loan documents at Exh. AW1/2 to Aw1/28 on 22.03.2018 at Exh.A/84.

4. 11. The learned Counsel for the Applicant Bank has submitted that bank has duly proved all the documents on file as required under "The Recovery of Debts and Bankruptcy Act, 1993". He further submitted that Defendants are wilful defaulters, as Defendants availed the aforesaid credit facilities for their benefits, but failed to maintain the financial discipline of the Bank and prayed that Original Application may be allowed for the reliefs claimed. Further written statement/reply has been filed beyond the statutory period as such is not to be read for the purpose of adjudication.

5. 12. I have gone through the loan documents Exh. AW1/2 to Aw1/28 and averments made in the Original Application and also considered the submissions made by learned Counsel for the Applicant Bank. All these documents have been proved by Applicant through the affidavit filed by the deponent and the documents have also been verified from original documents on 22.03.2018 and thus all loan documents have been proved in accordance with law.

1. 13. This Original Application has been filed by the Applicant Bank under Section 19 of RDB Act, 1993 to recover its dues against the borrowers/defendants in its ordinary course of banking business the amount recoverable is more than Rs.20.00 Lakhs (Rs.10.00 Lakhs prior to amendment) and comes within the ambit of term 'debt' as defined under section 2(g) of the Act, 1993. The Defendants are working and residing for their gains within the territorial jurisdiction of this Tribunal. So, this Tribunal has territorial and pecuniary jurisdiction to entertain, try and adjudicate this Original Application.

2. 14. I have considered the claim of the Applicant Bank. The above OA appears to have been filed within limitation. The Defendants executed Security documents in favour of the Applicant Bank for the Cash Credit Facilities and the latest documentation is dated 04.01.1985. Further the Borrower Company acknowledged its liability in their Balance sheet on 30.06.1985 and 07.04.1988 and Acknowledgement letter dated 21.12.1989. Applicant Bank sought permission for filing recovery suit from the Hon'ble High Court of Gujarat in Company Application No. 136/1991 and after obtaining it on 09.08.1991 filed suit in the Court of the Learned Civil Judge(SD) at Baroda as Civil Suit No. 83 of 1992 for recovery of total sum of Rs.1,39,56,796.73/- which was later transferred to the Tribunal as T.A. No. 577/1995 hence this Application is not barred by Law of Limitation.

3. 15. The Bank has proved availing of loan, execution of security documents, creation of mortgage, default and liability of the Defendants. The liability of the Defendants shall be joint and several and other personal movable and immovable properties of the defendants can also be sold for recovery of amount due.

4. 16. So far as rate of interest charged by applicant bank is concerned, it has charged rate of interest as per Terms and conditions of loan documents executed by the defendants. However, as per the provision of Section 19(20) of the Recovery of Debts Due to Banks and Financial Institution Act, 1993, now amended as The Recovery of Debts and Bankruptcy Act, 1993, which is analogous to Section 34 of Civil Procedure of Code 1908, on filing of the suit/claim, the contract between the parties comes to an end and the Court/Tribunal has a discretion to award the same depending upon the facts and circumstances of each case.

5. 17. Hence, looking to the facts and circumstances of the case, I am of the opinion that it would be just and proper to award **Rs. 1,39,56,796.73/- (Rupees: One Crores, Thirty Nine Lakhs, Fifty six Thousand, Seven hundred ninety six and Seventy three paise only)** together with further simple interest thereon @ 16% from the date of filing suit. Thus, the T.A. 271 of 1995 deserves to be allowed.

6. 18. Finally there are Applications filed by the Third Party Auction Purchaser for registration of Sale certificate for the auctioned flat and I.A. No. R/224 by the Defendant alleging that as the Memorandum of Association of the Borrower Company did not have any

provision to obtain loan from Bank, the Bank loans were ultra virus and Bank has no right to recover the same.

1. 19. With regards to applications filed by the Third Party Auction Purchaser for registration of Sale certificate it is observed that as per Report of Receiver at Ext.A/218 that 23 flats were sold through Tribunal and the Auction Purchasers along with Applicant Bank can take up this issue with Recovery Officer after the suit is decreed and for this there is no need for delaying final adjudication for a case pending since 1995.

2. 20. As for I.A. No. R/224, it is observed that Defendant has put forward a strange argument that as the Memorandum of Association of the Borrower Company did not have any provision to obtain loan from Bank, the Bank loans were ultra virus and Bank has no right to recover the same. No legal provisions have been placed which makes it compulsory that a Company should have a specific clause in Memorandum of Association for obtaining credit facilities from Bank/F.I. and in absence of such clause any loan obtained by the Company becomes unrecoverable. It is matter of record that the Borrower Company approached Bank of India (later merged with PNB) for credit facility and executed various documents for obtaining the said loan and also created mortgage on properties to secure the said loan. The loan availed by the Borrower Company is public money and now that the same has become due and suit has been filed for its recovery, the Borrower have raised objections that Bank has no right to recover the same because the Company did not mention it in its Memorandum of Association. Accordingly, the I.A. No. R/224 filed by the Borrower is devoid of any merit and is hereby rejected.

3. 21. In view of the aforesaid discussion, I deem it just and proper to allow the claim of the Applicant Bank for outstanding amount of **Rs. 1,39,56,796.73/- (Rupees: One Crores, Thirty Nine Lakhs, Fifty six Thousand, Seven hundred ninety six and Seventy three paise only)** together with further simple interest thereon @ 16% from the date of filing suit.

**ORDER**

1. 1. The above O.A. filed by the Applicant Bank is hereby allowed and the Defendants No. 1 to 11 are directed to pay jointly and severally to the Applicant No. 2 a sum of **Rs.1,39,56,796.73/- (Rupees: One Crores, Thirty Nine Lakhs, Fifty six Thousand, Seven hundred ninety six and Seventy three paise only)** along with pendentelite and future simple interest thereon at the rate of @ 16% p.a. from date of filing of suit till realization along with cost and other relief as stated therein.

2. 2. In case of failure to deposit the above amount within the stipulated period, the same shall be recovered from the mortgaged immovable property, which is more particularly described in **Schedule I & Schedule II of the OA**. If there is any shortfall, the same shall be recovered from the sale of other personal movable and

immovable properties of the Defendant. Further for the flats already auctioned through the Tribunal the Auction Purchasers along with Applicant Bank No. 1 may apply to Recovery Officer along with supporting documents for registration of Sale Certificate through Court Commissioner.

1. 3. Recovery Certificate be issued forthwith and be sent to Recovery Officer, Debts Recovery Tribunal-II, Ahmedabad.

2. 4. Ld. Recovery Officer is directed that if such request made by the third party Auction Purchaser or by the Applicant certified creditors, he will take up and judiciously deal with the issue as mentioned in para 19 of this Judgement.

3. 5. The Defendant are hereby restrained by means of injunction from depleting, transferring, encumbering, alienating or in any way dealing with their properties/assets without first paying the claim of the Applicant Bank.

4. 6. The registry of this Tribunal is hereby directed to issue the free copy of the order and be sent to both the parties in compliance of Rule 16 of the Debt Recovery Tribunal Procedure Rule 1993.

File be consigned to records.

Pronounced in Open Court on this 29^th May, 2026 at Ahmedabad.

**(PANKAJ KUMAR UPADHYAY)** **PRESIDING OFFICER** **DRT-II, AHMEDABAD**