Edelweiss Asset Reconstruction Company Limited vs SIDDHARTH WORLD TRADEPRIVATE LIMITED on 6 March 2024

J U D G M E N T

1. The Original Application has been filed by the Applicant against the Defendant No. 1 to 3 for recovery of following amount: i. Rs. 41,02,07,032/- (Rupees Forty One Crore Two Lakh Seven Thousand Thirty Two Only) under Term Loan Facility. ii. Rs. 14,21,43,634/- (Rupees Fourteen Crore Twenty One Lakh Forty Three Thousand Six Hundred Thirty Four Only) under Cash credit/ letter credit. iii. Aggregate amount of Rs. 55,23,50,066/- (Rupees Fifty Five Crore Twenty Three Lakh Fifty Thousand Sixty Six Only) with interest @ 15.70 % on term Loan and 14.95 % p.a. on CC/LC along with penal interest @ 2 % p.a. compounded monthly from the date of filing of the present OA till its realisation.

2. Facts as succinctly set out in the present OA are that the as per the assignment agreement dated 26.03.2014 Bank of India assigned to the Applicant all the financial assistances granted by the Bank with respect to the Defendant No. 1 together with all underlying security, interest and all its rights, title and interest. Pursuant to the said agreement, the Applicant has stepped into the shoes of the Bank of India under existing contracts, arrangements, security documents, etc.

3. It is stated the Defendant No. 1 was in need of fund for capital expenditure for supportive equipment for setting up and integrated manufacturing facility for processing milk and milk products. Defendant No. 1 approached and requested the Bank of India to provide various loans/ facilities.

4. It is further stated that at the request of Defendants, Bank of India along with the Defendant No. 4 acting as a consortium of Banks, sanctioned various credit facilities to the Defendant No. 1. Bank of India vide sanction letter dated 03.11.2009 sanctioned to the Defendant No. 1, a term loan of Rs. 2600 Lakh (with a one time LC Limit of Rs. 1040 Lakh).

5. In consideration of sanction of aforesaid facilities, Defendant No. 1, executed following loaning and security documents in favour of the Bank of India and Defendant No. 4: i. Term Loan Consortium Agreement ii. Confirmation/ Declaration/ Undertaking iii. Joint Deed of Hypothecation hypothecating plant and machinery, furniture and fixtures and other fixed assets to secure the term loan.

6. In order to secure the aforesaid facilities, Defendant No. 1 mortgaged its immovable property Industrial Plot and Building thereon at Plot No. 1E, Phase III, Sector I, Gat No. 50,51,52 & 53 located at Parvati Co-operative Industrial Estate Ltd. Yadrav Nagar, Tal. Shirol, Ichalkaranji in Kolhapur District admeasuring 27996.304 sq. mtrs. The said mortgage was created by a deposit of title deeds. The said deposit was made at the Ponda Branch at Defendant No. 4 and was recorded as a letter evidencing deposit of title deeds dated 22.12.2009.

7. Further, it is stated that in March 2010, the Defendant No. 1 requested Bank of India to issue a letter of credit for Rs. 14 Crore. Accordingly, Bank of India issued a letter of credit for Rs. 14 Crore on 22.03.2010.

8. It is also stated that Defendant No. 1 in March 2011, requested Bank of India for an additional loan of Rs. 10 Crore (Cash Credit/ Letter of Credit) for meeting their working capital requirements which was duly sanctioned by the Bank of India on 30.03.2011: i. Demand Promissory Note ii. Authorization to debit account no. 091520110000903 towards loan installments, interest, insurance premium and other charges. iii. Hypothecation cum Loan Agreement

9. In order to secure the aforesaid facilities, Defendant No. 2 & 3 executed personal guarantee dated 30.03.2011 guaranteeing the repayment of the additional loan of Rs. 10 Crore availed by the Defendant No. 1.

10. It is also stated that on 15.06.2012, the Defendant No. 1 to 3 executed an acknowledgement of debt acknowledging their liability as the principal borrower and guarantor for the various credit facilities availed by the Defendant No. 1 from Bank of India.

11. However, after availing aforesaid facilities, Defendant No. 1 failed and neglected to repay the outstanding dues, thus the account was classified as NPA. Further, the Applicant issued notice dated 23.11.2012 under section 13 (2) of the SARFAESI Act, 2002. Thereafter, the Defendants did not respond to the said notice. Bank of India took possession of the mortgaged property on 31.01.2013. Subsequently, Bank of India along with the Defendant No. 4 issued legal notice dated 04.03.2014 to the Defendants to pay the outstanding dues, but failed to do so. Hence the present OA.

12. Notices were issued to the Defendants. Despite service, none appeared for the Defendant No.1 to 3 thus, they were proceeded ex- parte vide order dated 20.03.2017. Subsequently, on 20.03.2017, the Defendant No.1 to 3 appeared through counsel and moved an Application (Exb.9) for setting aside the ex-parte order passed against them, which was allowed by this Tribunal and Defendant No.1 to 3 were allowed time to file the WS however, despite the opportunities, they failed to file the WS thus, right to file the WS was forfeited vide order dated 12.10.2017 and none appeared for these Defendants from 22.03.2018. Record reveals that despite service, none appeared on behalf of the Defendant No.4.

13. The Applicant Bank has produced all the Original Loan documents and other relevant documents along with their Claim Affidavit filed through their authorised signatory Manogna Valusa.

14. I have heard the Ld. Counsel for the Applicant Bank and perused the record.

15. The witness of the Applicant Bank has fully corroborated the averments made in the OA, 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 defendants. 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 3 is joint and several. No relief has been prayed against Defendant No. 4.

16. In the light of above discussions, the Original Application filed by the Applicant Bank deserves to be allowed against the Defendant No. 1 to 3.

O R D E R

(i) I allow the present O.A. and direct the Defendant No. 1 to 3 to pay to the Applicant, jointly and severally, within a period of 60 days, a sum following amounts:

a. Rs. 41,02,07,032/- (Rupees Forty One Crore Two Lakh Seven Thousand Thirty Two Only) under Term Loan Facility with interest @ 15.70 % on term Loan along with penal interest @ 2 % p.a. compounded monthly from the date of filing of the present OA till its realisation.

b. Rs. 14,21,43,634/- (Rupees Fourteen Crore Twenty One Lakh Forty Three Thousand Six Hundred Thirty Four Only) under Cash credit/ letter credit with interest

@14.95 % p.a. on CC/LC along with penal interest @ 2 % p.a. compounded monthly from the date of filing of the present OA till its realisation.

c. Aggregate amount of Rs. 55,23,50,066/- (Rupees Fifty Five Crore Twenty Three Lakh Fifty Thousand Sixty Six Only) with interest mentioned herein above.

(ii) Failing which the aforesaid amount shall be recovered from the sale of the mortgaged property, personal moveable and immoveable assets of the Defendant.

(iii) Defendant No. 1 to 3 is hereby directed not to deal with their properties till further direction of Ld. Recovery Officer.

(iv) Defendant No. 1 to 3 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 : 06.03.2024

Presiding Officer, DRT-1, Mumbai.

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