Encore Assets Reconstruction Company Private Limited vs M/S. VINTAGE HOSPITAL AND MEDICAL RESEARCH CENTRE PVT. LTD. on 24 January 2024

J U D G M E N T

1. The present Original Application has been filed by the NKGSB Co.op Bank Ltd. (Original Applicant) against the Defendants for recovery of sum of following amounts: i. Rs.1,78,26,245 (Rupees One Crore Seventy Eight Lakh Twenty Six Thousand Two Hundred Forty Five Only) from Defendant No.1 to 3 together with further interest 14.50 % with monthly resets from 01.05.2016 till payment and/ or realization thereof under the Loan Account No. LNM- 25; ii. Rs.6,38,64,407/- (Rupees Six Crore Thirty Eight Lakh Sixty Four Thousand Four Hundred Seven Only) from Defendant No.1 to 3 together with further interest @ 15.75 % with monthly rests from 01.05.2016 till payment and/ or realization thereof under Loan account No. LMN- 26; iii. Rs.34,54,545/- (Rupees Thirty Four Lakh Fifty Four Thousand Five Hundred Forty Five Only) from Defendant

No.1 to 3 together with further interest @ 14.50 % with monthly rests from 01.05.2016 till payment and/ or realization thereof under Loan account No. LNM- 27; iv. Rs.2,20,27,655.17 (Rupees Two Crore Twenty Lakh Twenty Seven Thousand Six Hundred Fifty Five and Paise Seventeen Only) from Defendant No.1 to 3 together with further interest @ 14.50 % with monthly rests from 01.05.2016 till payment and/ or realization thereof under Loan account No. ODAP 2; v. Rs. 91,96,533 (Rupees Ninety One Lakh Ninety Six Thousand Five Hundred Thirty Three Only) from Defendant No.1 to 4 together with further interest @ 14.50 % from 01.05.2016 till payment and/ or realization thereof under Loan Account No. Mortgage 2002.

2. During the pendency of the OA, the Original Applicant i.e. NKGSB Co-op. Bank Ltd. assigned all the rights, title, interest, and benefit in respect of the Debts of the Defendants, in favour of the Applicant vide Deed of Assignment dated 28.06.2019 and accordingly this Tribunal vide order dated 16.11.2021 allowed the IA No.562/2021 for substitution of Applicant herein in place of NKGSB Co-operative Bank Ltd. .

3. Facts as succinctly set out in the present OA are that the Defendant No. 1 is a company and borrower of the Applicant. Defendant No. 2 & 3 are the Director of the Defendant No. 1 and also stood Guarantors. The Defendant No.4 is a Corporate Guarantor to the loan obtained by the Defendant No.1 from Panaji Branch under loan account being Mortgage 2002 and therefore being Guarantor, the liability of the Defendant No.4 is joint with the Principal Borrower in respect of the liability under the loan account being Mortgage 2002.

4. It is stated that Defendant No. 1 as the constituent of the Original Applicant requests for credit facilities through its directors and after considering request, the original applicant vide sanction letter dated 03.11.2014 sanctioned following credit facilities: SR. No. Type of Facility Amount in Rs. Purpose

1. Term Loan I (LNM-

Rs. 6,00,00,000/ - Repayment of unsecured loan of Mr. Prasad Keni

2. Term Loan I (LNM-25) Rs. 1,65,00,000/- Take over loan from MUCB Ltd.

3. Term Loan I (LNM-27) Rs. 35,00,000/- Purchase of New Medical Equipment and Machinery

4. Overdraft Facility (ODAP 2) Rs. 2,00,00,000/ - Working Capital

5. In consideration of sanction of the aforesaid facilities, Defendants No. 1 through its Directors have executed following loaning and security documents: Repayment of Term Loan I (LNM-26) i. Demand Promissory Note dated 10.11.2014 ii. Term Loan Agreement dated 10.11.2014 Repayment of Term Loan I (LNM-25) i. Demand Promissory Note dated 10.11.2014

ii. Term Loan Agreement dated 10.11.2014 Repayment of Term Loan I (LNM-27) i. Demand Promissory Note dated 10.11.2014 ii. Term Loan Agreement dated 10.11.2014 Repayment of Overdraft facility (ODAP 2)

i. Demand Promissory Note dated 10.11.2014 ii. Term Loan Agreement dated 10.11.2014 iii. Agreement for Overdraft dated 10.11.2014 iv. Continuing Security Letter dated 10.11.2014 v. Letter of Lien and Set Off dated 10.11.2014 vi. Letter of Lien and Set Off dated 10.11.2014

6. In order to secure the aforesaid facility, Defendant No. 1 created security interest over the movable assets of the Defendant No. 1 being Machineries / Equipments by way of Hypothecation by executing Composite Hypothecation Agreement dated 10.11.2014.

7. Further, to secure the aforesaid facility, Defendant No. 2 and 3 stood as Guarantors and executed the Deed of Guarantee on 10.11.2014 in favour of the Original Applicant.

8. It is also stated that to secure the aforesaid facility, Defendants have created security interest by way of Equitable Mortgage of deposit of title deeds and also deposited the title deeds over the immovable properties viz. Ground Floor with Mezzanine having a built up area of 466m2 and First Floor having a built up area of 503.16 sq. mtrs in the building named as “A-9” (also known as “Vintage Hospital Building) of CACULO ENCLAVE” constructed on the following property: All that property described in the land survey (Cadastral Predial) under Chalta No. 1 to 7 and 7-A of P.T. Sheet No. 113 of City Survey Panaji from and out of the Agricultural property Gorbata with palmgrove bund with houses standing thereon known as also as “SAMPAIO situated in TALEIGAO, Tiswadi Taluka, Sub-District ilhas District Goa described Land Registration Office Ilhas under No. 16.367 of the Book B-43 new and described the Revenue Register (Matriz Pedial under No. 74, 143, 64 and 71 and presently admeasures 22816 sq. mtrs.

9. The Defendant deposited all the original title deeds of the said immovable properties on 15.11.2014 with the original Applicant with an intention to secure repayment of the dues which was duly recorded in the Memorandum of Entry and Letter evidencing deposit of title deeds dated 17.11.2014.

10. Further, it is stated that at the request of Defendant No. 1, the Original Applicant vide sanction letter dated 09.10.2013 sanctioned Term Loan of Rs. 1 Crore under Loan Account No. Mortgage- 2002 in favour of the Defendant No. 1.

11. In consideration of sanction of the aforesaid facility, Defendant No. 1 executed following loaning and security document on 24.10.2013: i. Demand Promissory Note ii. Term Loan Agreement

12. In order to secure the aforesaid facility, Defendant No. 2 & 3 stood as Guarantor and executed the Deed of Guarantee dated 24.10.2013 in favour of the Original Applicant. Further, Defendant No. 4 stood as Corporate Guarantor and executed the Deed of Corporate Guarantee dated 24.10.2023 in favour of the Original Applicant.

13. Further, it is stated that in consideration of the Original Applicant having agreed to grant and granted the said credit facility to the Defendant No.1 and to secure due repayment thereof, the Defendant No.2 had extended the security interest over the immovable properties viz. Block B situated on the 3rd Floor of Main Building named Vintage Hospital, Caculo Enclave, St. Inezz, Panaji, Goa and by way of equitable mortgage of deposit of title deeds and also deposited all the original title deeds of the said immovable property with the Original Applicant which was duly recorded in the Memorandum of Entry and Letter evidencing deposit of title deeds dated 23.10.2013.

14. However, after availing aforesaid facilities, Defendant No. 1 failed and neglected to make the outstanding dues, thus the account was classified as NPA on 31.12.2015. Thereafter, the Original Applicant issued demand notice dated 20.01.2016 under section 13 (2) of the SARFAESI Act, 2002 and called upon the Defendants to pay the outstanding dues. Thereafter, Original Applicant also issued Loan recall notice dated 16.05.2016 and called upon the Defendants to pay the outstanding dues, but failed to do so. Hence, the present OA has been filed.

15. Notices were issued to the Defendant. Defendant No. 1 to 4 put their appearance through counsel. Defendant No.2 & 3 filed their written statement on 13.10.2017. Despite opportunities, no WS has been filed by the Defendant No.1 & 4.

16. During the pendency of the OA, Ld. Counsel for the Applicant informed that the Defendant No.1 is under the CIRP as per order dated 19.05.2023 passed by the Ld. NCLT, Mumbai and Ms. Jyoti Reema Mathias, appointed as Interim Resolution Professional, therefore, the OA may proceed against Defendant No.2 and 3 being the guarantor and Defendant No.4 being the Corporate Guarantor.

17. In the Written Statement filed by the Defendant No. 2 & 3, they have raised objection that the Applicnats inpsite of being aware that the Defendant No.2 & 3 have already assigned the entire shareholding of the Defendant No.1 Company in favour of Dr. Shivkumar Alle Mariappa and Mr. Allee Mariappa, but have deliberately suppressed the same from this Tribunal. It is stated that the Applicant has deliberately not impleaded the aforesaid Dr. Shivkumar Alle Mariappa and Mr. Allee Mariappa as also has not mentioned through whom the summons is sought to be served or served on the Defendant No.1 and the Defendant No.4. Similarly the share holding pattern of the Defendant No.4 comprises again of the aforesaid two shareholders. The share holding pattern of the Defendant No.4 has already been produced on the Court File. The Applicants also have not mentioned through whom the Defendant No.4 is to be served in the present proceeding. It is further stated that the Defendant No.3 resigned as the Director, pursuant to which Dr. Shivkumar Alle was inducted as the Director of the Companies.

18. The Applicant has produced all the Original Loan documents and other relevant documents along with their Claim Affidavit filed through Authorized Signatory Virendra Ghanwat.

19. I have heard the Ld. Counsel for the Applicant and perused the record. Record reveals that since 13.06.2018, none appeared on behalf of the Defendants.

20. Now hereinafter, I would like to decide the issue raised by the Defendant No.2 & 3 in their written statement.

21. The only objection raised by the Defendant No.2 & 3 is that they have already assigned the entire shareholding of the Defendant No.1 Company in favour of Dr. Shivkumar Alle Mariappa and Mr. Allee Mariappa. It is further stated that the Defendant No.3 resigned as the Director, pursuant to which Dr. Shivkumar Alle was inducted as the Director of the Companies. I have gone through the record. Record reveals that the Defendant No.2 & 3 executed the Deed of Guarantee dated 10.11.2014 for Rs.10 crores with interest thereon or any other charges. As per clause 5 of the said Deed of Guarantee, it is agreed by the Defendant No.2 & 3 that: “The Guarantors hereby agree and declare that their liability under these presents shall be joint and several and irrevocable with the liability of the Borrower for repayment of the same together with interest, costs, charges and expenses. It shall be the sole discretion of the Bank as to against whom and in what manner Bank’s right to recover dues from the Borrower under and in relation to its said Credit facilities including Loan/Overdraft/Cash Credit/Bill Purchase/Guarantee/or any other facility account to be enforced. ************** **************

9. The Guarantors herein contained is a continuing one for all amounts lent and advanced and/or to be lent and advanced by the Bank, to the Borrower under the said Agreement sas also for all interest, costs, charges and expenses and all other monies which may from time to time become due and payable and remain unpaid for the time being to the Bank under the said various Agreements and shall be paid in full song with interest and all costs, charges and expenses and other monies as aforesaid.” (emphasis supplied) Further, as per clause 14 of the Guarantee, it is agreed by the Defendant No.2 to 4 that:

14. The Guarantor/s further declare that as between the Bank and the Guarantors, the Guarantors and each of their Partners/Directors will be treated as principal debtors jointly with the Borrower firm/company and accordingly the Guarantors shall not be entitled to and the Guarantors hereby waive all the rights conferred on the Guarantors by Section 130, 133, 134, 135, 139 and 141 of the Indian Contract Act.” (emphasis provided)

Therefore, on perusal of the above clauses, at the time of executing Deed of Guarantee, they were agreed to pay all the amounts which is due and payable by the Defendant No.1 to the Applicant. Further, the Guarantors agreed that they shall not entitled to waive its rights under Section 130, 133, 134, 135, 139 and 141 of the Indian Contract Act, thus, the Defendant No.2 & 3 in their capacity as guarantors are liable to pay the dues claimed by the Applicant. Even otherwise, the said Deed of Guarantee has never been released by the Applicant. Therefore, the objection raised by the Defendant No.2 & 3 is not sustainable hence, rejected.

22. The witness of the Applicant has fully corroborated the averments made in the OA, even otherwise the whole case of the Applicant is based on documents and the witness has duly proved all these documents as against the Defendants. In my view there is no question of disbelieving the evidence led by the Applicant and the Applicant has proved its case beyond reasonable doubt. The liability of the Defendant No.2 & 3 is joint and several. The liability of the Defendant No.4 is joint and several with Defendant No.2 & 3 upto the extent of the claim of the Applicant under Loan Account No. Mortgage 2002.

23. Since the Defendant No.1 is under CIRP as per order dated 19.05.2023 passed by the Ld. NCLT, Mumbai, therefore, the proceeding against the Defendant No.1 is hereby stayed and the Applicant is allowed a liberty to revive the OA against the Defendant No.1 as and when required.

24. In the light of above discussions, the Original Application deserves to be allowed against the Defendant No.2 to 4.

O R D E R

(i) I allow the present O.A. and direct the Defendant No.2 to 4 to pay to the Applicant, within a period of 60 days, the following sums:

a. Rs.1,78,26,245 (Rupees One Crore Seventy Eight Lakh Twenty Six Thousand Two Hundred Forty Five Only) by the Defendant No.2 & 3 under the Loan Account No. LNM- 25, together with further interest 14.50 % with monthly resets from 01.05.2016 till payment and/ or realization.

b. Rs.6,38,64,407/- (Rupees Six Crore Thirty Eight Lakh Sixty Four Thousand Four Hundred Seven Only) by the Defendant No.2 & 3 under Loan account No. LMN- 26, together with further interest @ 15.75 % with monthly rests from 01.05.2016 till payment and/ or realization.

c. Rs.34,54,545/- (Rupees Thirty Four Lakh Fifty Four Thousand Five Hundred Forty Five Only) by Defendant No.2 & 3 under Loan account No. LNM- 27, together with further interest @ 14.50 % with monthly rests from 01.05.2016 till payment and/ or realization.

d. Rs.2,20,27,655.17 (Rupees Two Crore Twenty Lakh Twenty Seven Thousand Six Hundred Fifty Five and Paise Seventeen Only) by Defendant No.2 & 3 under Loan account No. ODAP 2, together with further interest @ 14.50 % with monthly rests from 01.05.2016 till payment and/ or realization.

e. Rs. 91,96,533/- (Rupees Ninety One Lakh Ninety Six Thousand Five Hundred Thirty Three Only) by Defendant No.2 to 4 under Loan Account No. Mortgage 2002, together with further interest @ 14.50 % from 01.05.2016 till payment and/ or realization. Aggregating to an amount of Rs.11,63,69,405.17 (Rupees Eleven Crore Sixty Three Lakh Sixty Nine Thousand Four Hundred Five and paise Seventeen only) alongwith further interest as mentioned above.

(ii) Failing which the aforesaid amount shall be recovered from the sale of the personal moveable and immoveable assets of the Defendant No.2 to 4.

(iii) Defendant No.2 to 4 are hereby directed not to deal with their properties till further direction of Ld. Recovery Officer.

(iv) Defendant No.2 to 4 shall also pay the cost and expenses of the OA.

(v) 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 : 24.01.2024

Presiding Officer,

DRT-1, Mumbai sc/-