Debts Recovery Tribunals and Appellate Tribunals
LIFE INSURANCE CORPORATION OF INDIA vs eR TEXTILES LTD on 25 September 2023
Registered on :29.05.2006
Decided on : 25.09.2023
IN THE DEBT RECOVERY TRIBUNAL-I MUMBAI
TRANSFER APPLICATION NO. 1783 of 2016
LIFE INSURANCE CORPORATION OF INDIA)
A Statutory Corporation, established under the )
Life Insurance Corporation Act, 1956 (Act 31 of )
1956) having its Central Office at Yogakshema, )
Jeevan Bima Marg, Nariman Point, Mumbai
)
400 021
)
… APPLICANT
VERSUS
1. ER TEXTILES LTD.
)
(Earlier known as Circar Textiles Ltd.
)
202, House of Lords, 2nd Floor, St Marks )
Road, Bangalore 560 001
)
2. SHRI GRANDHI ESWARA RAO
)
Guarantor eR Textiles Ltd.
)
202, House of Lords, 2nd Floor, St Marks )
Road, Bangalore 560 001
)
3. SMT GRANDHI SARASWATHI
)
Guarantor eR Textiles Ltd.
)
202, House of Lords, 2nd Floor, St Marks )
Road, Bangalore 560 001
)
4. MS G SARITHA,
)
Guarantor eR Textiles Ltd.
)
202, House of Lords, 2nd Floor, St Marks )
Road, Bangalore 560 001
)
5. IDBI LTD.
)
IDBI Tower, WTC Complex, Cuffe
)
Parade Mumbai 400 005
)
...DEFENDANTS
_______________________________________________________________
Counsel for the Applicant :
Adv. Umar F. Azam i/b M. V. Kini &
Co.
Counsel for the Defendants :
None
______________________________________________________________
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J U D G M E N T
1. The Original Application has been filed by the Applicant before the Ld. DRT-II, Mumbai, which stands transferred to this Tribunal as per Govt. Notification dated 26.09.2016 and registered as TOA No. 1783/2016. The OA has been filed for recovery of Rs. 15,13,53,617.00 (Rupees Fifteen Crores Thirteen Lakhs Fifty Three Thousand Six Hundred Seventeen only) from Defendant No.1 to 4 together with further interest @ 14.50 %p.a. from 24.03.2006 till the full and final payment and/ or realization.
2. Facts as succinctly set out in the O.A./T.A are that the Defendant No.1 is a limited company and Defendant No. 2 to 4 are the Guarantors and Defendant No. 5 is the other financial institution who have granted Rupee Term Loan to Defendant No. 1. It is stated that the Defendant No. 1 approached the Applicant, for the financial assistance for project under Technology Up-gradation Fund Scheme (TUFS) vide their application dated 17.01.2000 along with other lender i.e. IDBI to meet the short fall in the resources to overrun the costs of the project and/ or working capital for the project and/or working capital for the project of manufacturing of 21 Million meters p.a. of high value cotton shirting and trousering fabric and home textile at Hosur, Tamil Nadu. The said request was considered by the Applicant vide their letter dated 17.06.2000.
3. It is stated that Applicant vide their letter of intent dated 01.12.2000 sanctioned a Rupee Term Loan of Rs. 15 Crores. As per the terms and conditions, the loan would be repaid in 28 quarterly instalments commencing from 01.04.2004 and ending on 01.01.2011. The interest rate was fixed at 2% above the prima lending rate (i.e. 12.5%) prevailing at the time of disbursement. Accordingly, the loan amount would carry interest @14.5% p.a. payable at quarterly on 01st February, 1st May, 1st Agusut and 1st November of each year and a charge of 2% p.a. by way of liquidate damages will be levied for defaults in payment of principal interest and other moneys payable under the loan agreement.
4. In consideration of sanction the said loan, the Defendant No.1 to 4 executed the following documents on 25.05.2001 & 25.04.2002
a. Demand Promissory Note
b. Loan Agreement
c. Deed of Hypothecation
d. Personal Guarantee Agreement executed by Defendant No.2 to 4
e. Undertaking Cum Indemnity
f. Undertaking for overrun and shortfall
g. Undertaking for Non Disposal of shareholding
h. Undertaking for non receipt of commission
i. Form No. 8 & 13
j. Memorandum of entry. The Defendant No.1 created security by way of equitable mortgage on first charge basis in favour of IDBI and LIC of its immovable properties situated at Mugulapally Village, Nariganapuram Village, Sanamangalam Village and Amutha Kandotpalli Village all in Hosur Taluk, Krishnagiri District, Tamil Nadu and deposited the title deeds on 24.04.2002 with IDBI, Hyderabad.
k. Declaration & undertaking
5. However, the Defendant No.1 failed to adhere to the financial discipline and neglected to make the payment of the outstanding dues. The Applicant sent various letters and reminders to the Defendant No.1 to 4 to clear the outstanding dues but they failed and neglected to make the payment of the outstanding dues. Thereafter, the Applicant issued recall notice dated 01.02.2005 and called upon the Defendant No.1 to 4 to pay the outstanding dues which was duly replied by them vide letter dated 11.03.2005 and 03.10.2005 and also submitted a proposal for restructuring of the Term Loan provided by the Applicant and IDBI. The Applicant vide their letter dated 17.10.2005 informed the Defendant No.1 that the Restructuring proposal in respect of Rupee Term Loan is not acceptable to the Applicant and advised to clear the outstanding dues but they failed to pay the dues. Hence, the present OA has been filed.
6. Notices were issued to the Defendants. Defendant No.1 to 3 put their appearance through their counsel however, despite opportunities, no WS has been filed on their behalf. Record reveals that after 14.02.2023, no one appeared on behalf of the Defendant No.1 to 3.
Despite service, none appeared for the Defendant No.4 & 5 nor filed the WS.
7. The Applicant Bank has filed and produced all the relevant documents and original documents alongwith their claim affidavit filed through their Assistant Secretary Mr. Anil Patkey.
8. I have heard the Ld. Counsel for the Applicant and gone through the record.
9. 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 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 4 is joint and several. The Defendant No.5 is a proforma Defendant and no monetary relief is claimed against Defendant No.5.
10. In the light of above discussions, the Original Application by the Applicant Bank deserves to be allowed against the Defendant No.1 to 4.
O R D E R
(i) The present O.A. is hereby allowed and Defendant No.1 to 4 are hereby directed to pay to the Applicant Bank, jointly and severally, within a period of 60 days, the sum of Rs.15,13,53,617.00 (Rupees Fifteen Crores Thirteen Lakhs
Fifty Three Thousand Six Hundred Seventeen only) from Defendant No.1 to 4 together with further interest @ 14.50% p.a. from 24.03.2006 till the full and final payment and/ or realization.
(ii) Failing which the aforesaid amount shall be recovered from the sale of mortgaged property, hypothecated assets as well as other personal movable and immovable assets of the Defendant No.1 to 4.
(iii) Defendant No.1 to 4 are hereby directed not to deal with their properties till further direction of Ld. Recovery Officer.
(iv) Defendant No.1 to 4 shall also pay the cost and expenses of the OA/TA.
(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: 25.09.2023
Presiding Officer,
DRT-1, Mumbai
Tjs/-