STATE BANK OF INDIA vs P G Textile Mills Ltd on 26 September 2025

**JUDGMENT**

1. 1. The present Transfer Application has been transferred from Court of Ld. CJSD, Baroda under Section 31 of The Recovery of Debts and Bankruptcy Act, 1993, which was filed against the Defendants for recovery of **Rs.76,12,783/- (Rupees: Seventy Six Lakhs Twelve Thousand Seven Hundred Eighty Three only)** together with further interest thereon @ 18% from the date of the Suit i.e. 26.05.1988 till realization from the defendant Nos. 1 to 4 jointly and/or severally along with cost of the Suit and other consequential reliefs.

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, in the Year **1988**, the Applicant Bank filed *Special Civil Suit No.283 of 1988 against Defendants Nos: 1 to 4* for recovery of Cash Credit facilities of Rs.76,12,783/-, granted to Defendant No: 1.

3. 3. The Ld. Court of Civil Judge (Sr. Div.), Baroda, by virtue of **Section 31, RDDB Act, 1993**, transferred this Suit to Debts Recovery Tribunal as **Transfer Application (TA) No.264/1995** on or about 16-05-1995.

4. 4. The Ld. Counsel for the Applicant submitted that notices were issued to all Defendants but only Defendant : 4 (**Madras Electrical Conductors Pvt. Ltd.**) appeared, without filing a reply initially. He further submitted that the Applicant Bank filed **Suit claim affidavit (Exh. A/42)**, Original loan and guarantee documents and Written arguments.

1. 5. The Ld. Counsel for the Applicant Bank submitted that on **31.03.2006**, the Tribunal allowed the claim and ordered all Defendant Nos: 1 to 4 to pay **Rs.76,12,783/- with simple interest @10% p.a. from 26.05.1988** until realization.

2. 6. The Ld. Counsel for the Applicant Bank has further submitted that in the Year **2007**, the Defendant No.4 filed **CMA No.26A/2007** along with a **Delay Condonation Application No.47/2006** seeking setting aside of the *ex parte judgment passed vide order dated 31.03.2006* and stay on Recovery Proceedings in **R.P. No.133/2006**. It is further submitted that the Bank opposed the CMA and the CMA was dismissed on 16-09-2011.

3. 7. The Defendant No: 4 being aggrieved by the order dated 16-09-2011 approached the Hon'ble DRAT, Mumbai by preferring Misc. Civil Appeal No.30 of 2013. After hearing, the Hon'ble DRAT, Mumbai, passed conditional order dated 31.08.2015 quashing and setting aside order dated 16.09.2011 of DRT subject to deposit of Rs.1 Crore within a period of six weeks from the date of receipt of the said order.

4. 8. Being aggrieved by order dated 31.08.2015 passed by the Hon'ble DRAT, Mumbai, the Defendant No.4 had filed **Special Civil Application No.16614 of 2015** before the Hon'ble Gujarat High Court, Ahmedabad. After hearing both the parties, the **Hon'ble High Court had passed an order dated 01.03.2016**. The Hon'ble High Court opined that the Hon'ble High Court was substantially in agreement with the view expressed by the DRAT that liberty to again defend cannot be granted without any condition. The Hon'ble High Court noted that the Bank filed Suit way back in the year 1988 and the proceedings of transfer suit before DRT were also within the knowledge of the petitioner, Defendant No.4, who admittedly engaged Advocate. However, the fact that no Written Statement was filed or that the Advocate did not inform the petitioner about the outcome of the Suit would not be a ground to enable the petitioner to defend itself

unconditionally and further noted that the Defendant No.4 though served with summons, did nothing further than engaging the Advocate. Finally, the Hon'ble High Court of Gujarat allowing the Petitioner to appear before the DRT and defending itself in the transfer suit, modified the condition imposed by Hon'ble DRAT and directed the Defendant No.4 to **deposit a sum of Rs.50 Lakhs (instead of Rs.1 Crore) before DRT latest by 15.04.2016** and clarified that the contentions of the Defendant No.4 are open and further clarified that the decree of DRT is set aside only qua the Defendant No.4 i.e. petitioner and no one else.

1. 9. The Ld. Counsel for the Applicant Bank has further submitted that as per the order dated 01.03.2016, Defendant No.4 deposited Demand Draft dated 12-04-2016 for Rs.50 Lakhs on 13.04.2016, and the said amount was ordered to be deposited with the Applicant Bank, Paldi Branch, Ahmedabad and placed in fixed deposit.

2. 10. It is further submitted that the Defendant No.4 after a period of more than one and half years, filed Written Statement verified on 20.09.2017 along with application for condonation of delay in filing Written Statement verified on 11.10.2017 praying for condoning the delay and taking the written statement on record. It is submitted that as per Section 19(5) of the RDBD Act, maximum period for filing Written Statement provided is 45 days, however, after hearing both the parties, in the interest of justice, the Tribunal allowed the application for condoning delay in filing Written Statement and taking Written Statement on record of the case, subject to payment of cost of Rs.10,000/-, which was paid by the said Defendant No: 4 to the Applicant Bank and the Written Statement was taken on record. The Defendant No.4 also filed Affidavit in reply against affidavit in support of Suit Claim and further affidavit on Nov. 2017.

1. 11. In its Written statement, Defendant No.4 raised the following main arguments and issues are accordingly framed as under:

**Issue No. 1-** Documentary evidence and claim affidavit is not referenced in original order dated 31.03.2006.

**Issue No. 2 –** There is no evidence placed that Defendant No.4 stood as guarantor for cash credit facility of Rs.96.00 Lakhs and Defendant No.4 cannot be made liable as guarantor for various credit facilities sanctioned to Defendant No.1.

**Issue No. 3-** Borrower (Defendant No.1) is in liquidation, and Bank has not disclosed recoveries made from Official Liquidator (OL).

**Issue No. 4-** Defendant No.4 claim is that suit is **barred by limitation**.

**Issue No. 5-** Revival letters dated 15-03-1986 are not valid and the signature of Managing Director of the Opponent No.4 Company is not authorized by Defendant No.4 Company.

**Issue No. 6-** Bank claim and statement of account is not supported by affidavit.

1. 12. While the Defendant No: 4 has filed his Written Statement at a very late stage, but after that he preferred not to pursue his case and therefore this Tribunal has got no option left, then to proceed exparte against the Defendant No: 4, as this oldest case cannot be kept pending at the mercy of appearance of Defendant No: 4. Accordingly, the case was proceeded exparte against Defendant No: 4 vide order dated 30-06-2025.

2. 13. After hearing the Ld. Counsel for the Applicant and perusing the pleadings and evidences on record, the above mentioned issues are being decided as follows :

**Issue No. 1- Documentary evidence and claim affidavit is not referenced in original order dated 31.03.2006.**

14. For Issue No. 1 at the very outset, it is observed that the original order dated 31.03.2006 was decided ex parte based on the pleadings and documents filed by the Applicant Bank and the same have been duly mentioned in the said order. The Hon'ble High Court of Gujarat vide order dated 01.03.2016 in Spl. Civil Application No. 16614 of 2015 allowed Defendant No. 4 to appear before the DRT and defend itself in the transfer suit and directed the Defendant No.4 to deposit a sum of Rs.50 Lakhs before DRT latest by 15.04.2016 and clarified that the contentions of the Defendant No.4 are open and further clarified that the decree of DRT is set aside only qua the Defendant No.4 i.e. petitioner and no one else. As such it is evident that while providing the opportunity to Defendant No. 4 the Hon'ble High Court of Gujarat limited the scope of relief only to filing of Written Statement before the Tribunal; however Defendant No. 4 has used it to raise objection on the original order dated 31.03.2006 itself. If Defendant No. 4 wishes to challenge the order dated 31.03.2006 the recourse will be by Review or Appeal, however it has used the opportunity provided to file Written Statement to raise objection against the original order dated 31.03.2006. It is further observed after appearing before the Tribunal in compliance of the directions of the Hon'ble High Court of Gujarat, Defendant No. 4 took a long time in filing the Written Statement and it was allowed by the Tribunal on cost of Rs. 10,000/- and after that Defendant No. 4 once again remains absent from the proceedings. As such Defendant No. 4 cannot raise objections on a final order through Written Statement further it has failed to be present before the Tribunal and explain as to how such a thing is possible. **As such the Issue No: 1 is decided in Negative against Defendant No. 4 and in favour of Applicant Bank.**

**Issue No. 2 – There is no evidence placed that Defendant No.4 stood as guarantor for cash credit facility of Rs.96.00 Lakhs and Defendant No.4 cannot be made liable as guarantor for various credit facilities sanctioned to Defendant No.1.**

1. 15. For Issue No. 2 it is observed that the Applicant Bank has filed documents in support of their claim including Promissory Note dated 14.04.1983 signed by Managing Director of Defendant No. 4 to stand as guarantor to the extent of Rs. 96,00,000/- and interest on balance from time to time payable to Bank by the Borrower . It also provides that any renewal there of shall be held by Bank upon and subject to the same terms and conditions as are herein expressed and contained with reference to the said promissory note. There is also Revival letter dated 15.03.1986 duly signed by Managing Director (Defendant No. 3) of Defendant No. 4. Applicant Bank has also filed Board Resolution (Exh. A/70) dated 18.01.1983 of Defendant No 4, authorizing execution of loan/guarantee documents being availed by Defendant No. 1 from Applicant Bank. In the Written submission filed by the Applicant bank has submitted that the extracts of the resolution of the Board of Directors of Defendant No. 4 is reproduced, which confirms that the defendant No. 4 is corporate guarantor and executed legally the loan documents and other required documents with regard to credit facilities granted at their request to Defendant No. 1. Applicant Bank also submitted that Defendant No. 4 has submitted that their Managing Director is not the competent person to sign the loan documents and even the extracts produced are not genuine, however other than bare pleadings Defendant No. 4 has not produced any cogent evidence nor they have taken any action against their Managing Director or file correct extract of Board resolution, as such these appears to be bare allegations to wriggle out of their liability. Applicant Bank has successfully rebutted the claims of Defendants No. 4 duly supported with documentary proofs.

Defendant No. 4 remains absent from the proceedings and has not placed any documentary evidence to rebut the claim of Applicant bank. **As such the Issue No: 2 is decided in Negative in favor of Applicant.**

**Issue No. 3- Borrower (Defendant No.1) is in liquidation, and Bank has not disclosed recoveries made from Official Liquidator (OL).**

16. Applicant Bank has submitted that recovery of any amount from the liquidation proceedings of defendant No. 1 is to be considered and applied during the recovery proceedings initiated under the judgment and recovery certificate issued by the Hon'ble Tribunal vide order dated 31.03.2006. It is observed that Official Liquidator is duly made party in the OA and ex parte order has been passed on 31.03.2006. The contention of Applicant Bank appears to be legally acceptable. **As such Issue No. 3 is decided in Negative in favor of Applicant.**

**Issue No. 4- Defendant No.4 claim is that suit is barred by limitation.**

17. The Loan documents date is 14.04.1983 and revival letter date is 15.03.1986 and Suit is filed by the Applicant Bank for recovery of Cash Credit facilities on 26.05.1988 as such the Suit is filed within three years limitation period. **As such Issue No. 4 is decided in Negative in favor of Applicant.**

**Issue No. 5- Revival letters dated 15-03-1986 are not valid and the signature of Managing Director of the Opponent No.4 Company is not authorized by Defendant No.4 Company.**

18. In the Written submission filed by the Applicant bank has submitted that the extracts of the resolution of the Board of Directors of Defendant No. 4 is reproduced, which confirms the Defendant No. 4 is corporate guarantor and their Managing Director has duly signed the loan documents and revival letter. Defendant No. 4 has not produced any cogent evidence to prove that revival letter

dated 15-03-1986 is not valid and the signature of Managing Director of the Defendant No: 4 company is not authorized. ^b8 Defendant No: 4 company nor they have shown that any action has been taken against their Managing Director or filed correct extract of Board resolution. Applicant Bank has successfully rebutted the claims of Defendants No. 4 duly supported with documentary proofs. Defendant No. 4 remains absent from the proceedings and has not placed any documentary evidence to rebut the claim of Applicant bank. **As such the Issue No: 5 is decided in Negative in favor of Applicant.**

**Issue No. 6- Bank claim and statement of account is not supported by affidavit.**

19. The present Transfer Application has been transferred from Court of Ld. CJSD, Baroda under Section 31 of The Recovery of Debts and Bankruptcy Act, 1993. As such the present suit was initially filed before the Court of Ld. CJ SD Baroda and after it was transferred to the Tribunal, Applicant Bank filed affidavit duly sworn in by Mr. P.C. Bhattacharya, AGM (C&I), State Bank of India, C&I Division, Baroda (Exh.A/42) in support of its claim and the same is on record. Applicant Bank has also filed original documents in support of its claim. **As such the Issue No. 6 is decided in Negative in favor of Applicant.**

20. I have heard the learned counsel for the Applicant and have gone through the case file properly. I have also gone through the law applicable to the facts and circumstances of the present case.

21. From the perusal of the records, it is evident that Defendant was provided with fair opportunity to contest the claim of the Bank, but Defendant opted not to contest the case, so only point of consideration before this Tribunal is whether the Applicant Bank is legally entitled to recover the amount from Defendant as

claimed in T.A. on the basis of documents and pleadings submitted by it before the Tribunal.

1. 22. In support of Transfer Application, Applicant Bank has filed affidavit in support of suit claim on **01-08-1996 Exh. A/42** in support of its claim, duly sworn in by **Mr. P.C. Bhattacharya, AGM (C&I), State Bank of India, C&I Division, Baroda.**

2. 23. 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 Defendant No: 4 is a willful defaulter and in the resolution of the Board of Directors of Defendant No: 4, it confirms that the Defendant No: 4 is a corporate guarantor and executed legally enforceable loan documents and other required documents with regard to credit facilities granted at their request to Defendant No: 1, borrower company including execution of revival letter. It is submitted that thus, the guarantee through Promissory note is a continuing guarantee and Defendant No: 4 is liable for the amount outstanding, as per the settled legal precedents duly recognized in various judgments. The Defendant No.4 through it Managing Director (Defendant No. 3) has also signed Deed of guarantee dated 14.04.1983 of Rs.96.00 Lakhs along with its official stamp. Other loan documents executed are - Letter of indemnity dated 14.04.1983. There is also Sanction letter dated 21.02.1987 for reviewed (i) Cash credit facility of Rs.96.00 Lakhs. (ii) Documentary bills discounting facility of Rs.46.00 Lakhs, (iii) Letter of Credit facility of Rs.40.00 lakhs and (iv) Guarantee of Rs. 5.00 Lakhs, wherein amongst other terms and conditions it is stated that the Defendant No.3 is also guarantor in person capacity. There is also Revival letter dated 15.03.1986 of the amount of Rs.96.00 Lakhs acknowledging the liability executed by Defendant No.4 along with its official stamp.

24. I have gone through the loan documents and averments made in the Transfer Application and also considered the submission made by the Learned Counsel for the Applicant Bank. The Applicant has also produced revival letter for the facility of Rs.96.00 Lakhs granted to Defendant No.1 Company at the request of Defendant Nos.1 to 4 signed and executed by defendant Nos. 1 to 4 dated 15.03.1986. It is further submitted that the terms and conditions of documents executed by Defendant No.4 provides for the sanction of cash credit amount of Rs.96 Lakhs and further provides that the guarantee shall be considered continuing guarantee and will remain in full force and as such enforceable as a continuing guarantee until the notice in writing that the same is closed is given by the bank and amongst other terms and conditions.

25. All these documents have been proved by the Applicant through the affidavit filed by the deponent and the documents have also been verified from original documents on 01-08-1996 and thus all loan documents have been proved in accordance with law. The evidence adduced by the Bank on the case file stood unchallenged and un-rebutted. There is no reason to disbelieve the same. Defendant No. 4 has opted not to contest the suit after filing Written statement.

26. This Transfer Application has come before the Tribunal from the Court of Ld. CJSD, Baroda under Section 31 of RDB Act, 1993. Amount recoverable is more than Rs.10.00 lakhs and comes within the ambit of term 'debt' as defined under Section 2(g) of the Act, 1993. The Parties are working and residing for gain within the territorial jurisdiction of this Tribunal. So, this Tribunal has territorial and pecuniary jurisdiction to entertain, try and adjudicate this Transfer Application.

27. I have considered the claim of the Applicant Bank. The Defendant No.4 has also signed deed of guarantee dated 14.04.1983 of Rs.96 Lakhs along with its official stamp, letter of indemnity along with its official stamp dated 14.04.1983, sanction letter of review credit facility of the demand cash credit facility of Rs.96 Lakhs,

documentary bills discounting facility of Rs.46 Lakhs, letters of credit facility of Rs.40 Lakhs and guarantee of Rs.5 Lakhs dated 21.02.1983. Issues regarding limitation etc. have been duly considered and balance of convenience is in favour of the Applicant bank.

28. So far as rate of interest charged by the Applicant Bank is concerned, it has charged rate of interest as per Terms and conditions of loan documents executed by the Defendant. 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 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.

29. **As per directions of Hon'ble High Court of Gujarat vide order dated 01.03.2016 in Special Civil Application No.16614 of 2015** only the claim of Defendant No. 4 is to be considered and for Defendant No. 1 to 3 original order dated 31.03.2006 will apply. Hence, looking to the facts and circumstances of the case, I am of the opinion that it would be just and proper in the interest of justice to award simple interest @ 10% for Cash Credit facility, being the contractual rate for the said facility from the date of filing suit till the payment of realization and recovery of the said dues.

30. 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.76,12,783/- (Rupees: Seventy Six Lakhs Twelve Thousand Seven Hundred Eighty Three only)** together with further simple interest thereon @ **10%** for Cash Credit facility per annum being the contractual rate in respect of the said credit facilities against Defendant No. 4 who shall be jointly and severally be liable to pay the dues along with Defendant Nos. 1 to 3 as per Original order dated 31.03.2006.

13T.A. No. 264 of 1995**ORDER**

1. 1. The above O.A. filed by the Applicant Bank is hereby allowed and the Defendant no. 4 is directed to pay jointly and severally a sum of **Rs.76,12,783/- (Rupees: Seventy Six Lakhs Twelve Thousand Seven Hundred Eighty Three only) together with simple interest thereon @ 10% for Cash Credit facility per annum from 26.05.1988** till the date of realization along with cost of TA and other expenses within 30 days . The Original order dated 31.03.2006 for liability of Defendant No. 4 is reconfirmed and all Defendants are directed to pay jointly and severally to the Applicant bank the outstanding dues as per the original order dated 31.03.2006.

2. 2. The Fixed deposit of Rs. 50.00 lakhs may be appropriated by Applicant Bank .

3. 3. In case of failure to deposit the above amount within the stipulated period, the same shall be recovered from the mortgaged immovable property. If there is any shortfall, the same shall be recovered from the sale of other personal movable and immovable properties of the Defendant.

4. 4. Recovery Certificate be issued against all Defendants forthwith and be sent to Recovery Officer, Debts Recovery Tribunal-II, Ahmedabad. If Recovery Certificate is already issued against Defendant Nos. 1 to 3 then the same to be amended and name of Defendant No. 4 is to be added.

5. 5. The Defendant is 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.

1. 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 **26^th day of September, 2025** at Ahmedabad.

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

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