UNION BANK OF INDIA (CORPORATION BANK) vs M/S THANDIRAM TEXTILES PRIVATE LIMITED on 12 January 2024

J U D G M E N T

1. The Original Application has been filed by the Applicant against the Defendants before Ld. DRT-III, Mumbai, which stands transferred to this Tribunal as per the Govt. Notification dated 26/09/2016 and registered as TA No. 333/2016. The OA has been filed by the Applicant for recovery following amounts: i. Rs. 9,81,42,242.47 (Rupees Nine Crore Eighty One Lakh Forty Two Thousand Two Hundred Forty Two and Paise Forty Seven Only) inclusive of interest under the cash credit facility. ii. Rs. 1,45,91,432/- (Rupees One Crore Forty Five Lakh Ninety One Thousand Four Hundred Thirty Two Only) inclusive of interest under the Working Capital Term Loan faciality. iii. Rs. 58,11,607/- (Rupees Fifty Eight Lakh Eleven Thousand Six Hundred Seven Only) inclusive of interest under the Packing Credi limit. Aggregating to a sum of Rs. 11,85,45,281.47 (Rupees Eleven Crore Eighty Five Lakh Forty Five Thousand Two Hundred Eighty One and Paise Forty Seven Only) as on 01.03.2016 with further interest @ 17.75% p.a. at monthly rests from 02.03.2016 along with other costs, charges and expenses till the full and payment and realisation.

2. Facts as succinctly set out in the present OA/TA are that Defendant No. 1 is the company carrying on business of Textile Trading and export of Yarns etc. The Defendant No. 2 to 4 are the Directors of Defendant No. 1 company and have extended their personal guarantees in favour of the Applicant for repayment. Defendant No. 5 is a Bank, and added as a Proforma Defendant as is calming pari passu charge in respect of the properties of Defendant No. 1.

3. It is stated that Defendant No. 1, vide an application for credit facilities dated 03.08.2013 requested the Applicant to sanction credit facilities to the extent of Rs. 11.50 Crores. Pursuant to the request, Applicant vide sanction letter dated 11.03.2014 sanctioned cash credit facility to an extent of Rs. 8.50 Crores for working capital requirements, and inland/ Import letter of credit facility to an extent of Rs. 1.50 Crores for import of stock for trading total aggregating to a sum of Rs. 10 Crores.

4. In consideration of sanction of the aforesaid facility, Defendant No.1 to 4 have executed a Demand Promissory Note dated 19.03.2014 whereby the Defendant No. 1 to 4 promised to pay on demand a sum of Rs. 8.50 Crores together with interest. Further, it is stated that Defendant No. 1 has executed a common deed of Hypothecation of Movables/ Assets/ Debts dated 19.03.2012, whereby in order to secure the repayment of the loan of Rs. 10 Crores with interest, costs and charges thereon, the Defendant No. 1 has hypothecated all stock in trade, Book debts and all the movables/ Assets/ Debts. Thereafter, Defendant No. 1 has executed Trustee Receipt dated 19.03.2014 in favour of the Bank, whereby, inter alia, acknowledged that the Defendant No. 1 has provided the security in respect of all the goods, merchandise, documents of title to the goods and hold the same as the same as the Applicant’s agent.

5. In order to further secure the aforesaid facility Defendant No. 2 to 4 have executed a guarantee agreement dated 18.03.2014, in favour of the Applicant for an amount of Rs. 10 Crores. Further, Defendant No. 3 visited the Applicant on 19.03.2014 and deposited the title deeds with an intention to create mortgage in order to secure the repayment of monies due, in respect of the immovable property, namely, Office No. 302, admg. 1705, sq. Ft. Built up Area, on the 3rd Floor, in the building known as “Peninsula Park” situate at Veera Desai Road, Andheri (W), Mumbai- 400 053, situated on Plot No. B-4, CTS No. 694, Oshiwara, City Survey, Andheri, Mumbai Suburban District in the Registration District and Sub- District of Mumbai City and Mumbai Suburban.

6. It is further stated that Defendant No. 1 vide its letter dated 27.09.2014 requested the Applicant to convert the aforesaid letter of credit limit of Rs. 1.50 Crores into Working Capital Term Loan Scheme. The loan was to be repaid in 36 installment.

7. In consideration of sanction of aforesaid facility, Defendants executed following security and loaning documents: i. Defendant No. 3 secured the said facility by continuing the mortgaged property which was mortgaged on 19.03.2014. ii. Defendant No. 1 has executed Demand Promissory Note; Agreement for Term Loan dated 30.09.2014. iii. Defendant No. 1 executed a supplemental common deed of Hypothecation of Movables/ Assets/ Debts dated 30.09.2014, whereby in order to secure the repayment of the loan of Rs. 11.50 Crores with interest, costs and charges thereon, the Defendant No. 1 has hypothecated all stock in trade, Book debts and all the movables owned by the Defendant No. 1. iv. Defendant No. 2 to 4 executed a guarantee agreement dated 30.09.2014.

8. It is stated that Defendant No. 1 vide a letter dated 27.10.2014 requested the Applicant to grant a Packing credit for a sum of Rs. 50 Lakhs. Pursuant to the request, Applicant vide sanction letter dated 15.11.2014 sanctioned one time packing credit limit for an amount of Rs. 50 Crores.

9. In consideration of sanction of said packing credit facility, Defendants executed following loaning and security documents in favour of the Applicant: i. Demand Promissory Note executed by Defendant No. 1 dated 18.11.2014. ii. Export Credit Agreement executed by Defendant No. 1 dated 18.11.2014. iii. Common Deed of Hypothecation executed by Defendant No. 1 dated 18.11.2014. Defendant No. 1 has hypothecated all stock in trade, book debts and all the movable owned by the Defendant No. 1 as per Financial Statement and to be acquired in future i.e. both present and future. iv. Defendant No. 2 to 4 executed a Guarantee Agreement dated 18.11.2014. v. Defendant No. 3 executed a letter of continuity for packing credit limit and extended the mortgage of the mortgaged property which was deposited on 19.03.2014.

vi. Defendant No. 1 executed three separate demand promissory notes dated 10.01.2015.

10. However, after availing the said credit facility, Defendant No. 1 failed to regularise the account thus, the account was classified as NPA on 29.06.2015. Thereafter, the Applicant issued a demand notice dated 17.02.2016 and called upon the Defendants to make the payment of outstanding dues. Hence, the present OA is filed.

11. During the pendency of the OA, Corporation Bank has been merged with the Union Bank of India in pursuance of Gazette Notification bearing No. GRS 154 (E), dated 04.03.2020 issued by Ministry of Finance. The Applicant states that the loan was granted by the Corporation Bank which was been merged with the Applicant.

12. Notice was issued to the Defendants. Despite service, none appeared for the Defendant No. 1 to 4 nor filed the WS thus, Defendant No. 1 to 4 were proceeded ex-parte vide order dated 06.12.2023, Defendant 5 put their appearance through counsel and has filed WS on 04.07.2017.

13. In the Written Statement, Defendant No. 5 is claiming first pari pasu charge on the mortgaged property as well as hypothecated assets/ goods.

14. The Applicant Bank has produced all the Original Loan documents and other relevant documents along with their Claim Affidavit filed on 19.12.2017 through Chief Manager Shriniwas Rao.

15. No CAOD has been filed on behalf of the Defendant No. 5.

16. I have heard the Ld. Counsel for the Applicant Bank as well as Defendant No. 5 and perused the record. Now hereinafter, I would like to decide the issue raised by the Defendant No. 5 in their written statement: i. Defendant No. 5 is claiming its charge over the movable; immovable properties & bookdebts of Defendant No. 1. However, the Defendant No. 5 failed to produce any document to prove that Defendant No. 5 has charge over mortgage property. ii. In so far as charge over the hypothecation bookdebts is concerned the Defendant No. 5 is claiming its charge on the basis of registered common hypothecation agreement dated 19.11.2012, whereas the Applicant is claiming its charge on the basis of registered common deed of hypothecation of Movable/ Assets/ Debts dated 19.03.2014. Therefore, the Defendant No. 5 has first charge over the same, thus, the Defendant No. 5 may approach to the Recovery Officer for their first charge over all the movable goods and bookdebts.

17. The witness of the Applicant Bank has fully corroborated the averments made in the OA/TA, even otherwise the whole case of the Applicant Bank is based on documents and the witness has duly proved all these documents as against the defendant. In my view there is no question of disbelieving the evidence led by the Applicant Bank and the Applicant Bank has proved its case beyond reasonable doubt. The liability of Defendant No. 1 to 4 is joint and several. The Defendant No. 5 is a profoma Defendant and no relief is claimed against these Defendant.

18. In the light of above discussions, the Original Application filed by the Applicant Bank deserves to be allowed against the Defendant No. 1 to 4.

O R D E R

(i) I allow the present O.A. and direct the Defendant No. 1 to 4, to pay to the Applicant, jointly and severally, within a period of 60 days, a sum of following amounts:

a. Rs. 9,81,42,242.47 (Rupees Nine Crore Eighty One Lakh Forty Two Thousand Two Hundred Forty Two and Paise Forty Seven Only) inclusive of interest under the cash credit facility.

b. Rs. 1,45,91,432/- (Rupees One Crore Forty Five Lakh Ninety One Thousand Four Hundred Thirty Two Only) inclusive of interest under the Working Capital Term Loan faciality.

c. Rs. 58,11,607/- (Rupees Fifty Eight Lakh Eleven Thousand Six Hundred Seven Only) inclusive of interest under the Packing Credi limit. Aggregating to a sum of Rs. 11,85,45,281.47 (Rupees Eleven Crore Eighty Five Lakh Forty Five Thousand Two Hundred Eighty One and Paise Forty Seven Only) as on 01.03.2016 with further interest @ 17.75% p.a. at monthly rests from 02.03.2016 along with other costs, charges and expenses till the full and payment and realisation.

(ii) Failing which the aforesaid amount shall be recovered from the sale of the hypothecated goods, mortgaged property, immoveable assets as well as other personal moveable of the Defendant No. 1 to 4.

(iii) Defendant No. 5 may approach to the Ld. Recovery Officer for their first charge over the hypothecation stocks, bookdebts.

(iv) Defendant No. 1 to 4 are hereby directed not to deal with their properties till further direction of Ld. Recovery Officer.

(v) Defendant No. 1 to 4 shall also pay the cost and expenses of the OA.

(vi) Recovery Certificate be issued forthwith and be sent to the Recovery Officer of this Tribunal.

Copy of this order be sent to the parties as per rules. File be consigned to record.

Place: Mumbai.

(Dr. Rekha G. Dhakar) Date : 12.01.2024

Presiding Officer, DRT-1, Mumbai.

Tjs/-