Edelweiss Asset Reconstruction Company Limited vs INDAGE VINTNERS LIMITED on 22 November 2023

J U D G M E N T

1. The Original Application has been filed by the Applicant against the Defendants before the Ld. DRT-II, Mumbai, which stands transferred to this Tribunal on 13.02.2017 as per Govt. Notification dated 26.09.2016 and registered as TOA No.1512/2016. The OA has been filed for recovery of Rs.6,60,30,124.47 (Rupees Six Crores Sixty Lakhs Thirty Thousand One Hundred Twenty Four and paise Forty Seven only) as on 16.09.2009 with further interest @24% p.a. upon the footing of compound interest on monthly basis from 17.09.2009 till its realization.

2. During the pendency of the OA, the loan account was assigned by the original lender i.e. Kotak Mahindra Bank in favour of the Applicant vide Deed of Assignment dated 20.03.2018. Accordingly, the IA No.749/2022 for substitution of Applicant in place of Kotak Mahindra Bank was allowed by this Tribunal vide order dated 01.07.2022.

3. Facts as succinctly set out in the O.A./T.A. are that the Defendant No. 1 is the Principal Borrower and also stood as Corporate Guarantor for the facilities extended to Defendant No.4. The Defendant No.2 & 3 are the Directors of the Defendant No.1 and have guaranteed payment of it’s dues. The Defendant No.4 & 5 are Group Companies of Defendant No.1 and have also been joined in their capacity as corporate guarantors of the Defendant No.1 having guaranteed repayment of the entire amount due and payable by Defendant No.1 under the Short Term Loan Facility and Buyer’s Credit Facility.

4. It is stated that during the year 2007-2008, the Defendant No.1 approached the Applicant for various financial facilities to the Defendant No.1. The said request was considered by the Applicant and sanctioned the following facilities:

(i) Short Term Loan of Rs.500 lakhs

(ii) Buyer’s Credit of Rs.101 lakhs

5. In consideration thereof and to secure the repayment due and payable by the Defendant No.1 in respect of the aforesaid facilities, the Defendant No.1 to 5 executed the following loaning and security documents:

(i) The Applicant issued sanction letter dated 20.07.2007 which was duly acknowledged by the Defendant No.1;

(ii) The Applicant further issued various sanction letters dated 22.08.2007, 04.04.2008 and 12.08.2008 which were duly acknowledged by the Defendant No.1;

(iii) The Defendant No.5 offered additional collateral of Indage House, Plot No.82 of the Scheme 58, Worli Estate, Mumbai and executed Deed of Mortgage dated 20.03.2009;

(iv) The Defendant No.1 vide a letter dated 02.06.2009 offered additional security of the Agriculture Land situated at Village Yedgaon (Bhorwadi), Taluka Junnar, District Pune;

(v) The said offer of Defendant No.1 was duly accepted by the Defendant No.4 vide its letter dated 02.06.2009 and the Defendant No.4 gave no objection in extending the mortgage on the said agriculture land;

(vi) The Applicant vide their letter dated 03.06.2009 duly accepted the offer of extension of mortgage made by Defendant No.1 & 4 which letter was duly acknowledged by the Defendant No.1 & 4;

(vii) Pursuant to the aforesaid, the Deed of Mortgage and Deed of Rectification both dated 24.06.2009 were duly executed and registered with the Sub-Registrar of Assurance, Narayangaon, inter alia recording extension of mortgage of the said Agriculture land;

(viii) Defendant No.1 also entered into Master Facility Agreement dated 25.07.2007 and Agreement for Loan and Hypothecation of Receivables dated 20.08.2008. The Applicant made disbursement of the sanctioned amounts in favour of the Defendant No.1 from time to time;

(ix) Defendant No.2, 3, 4 & 5 also executed Deed of Guarantee dated 25.07.2007, 20.08.2008, 31.01.2009, 20.03.2009, 21.03.2009, 30.03.2009 and 09.06.2009;

6. It is also stated that in view of the consistent default on the part of the Defendant No.1 in repayment of the credit facilities and default on the part of the Defendants No.2 to 5 in complying with their obligations under the guarantees executed by them, the Applicant recalled the entire outstanding dues. The Defendant No.4 thereupon forwarded a letter dated 14.03.2009 requesting the Applicant to grant time of 180 days for repayment of debts and renew the cash credit facility.

7. It is also stated that the Defendants by agreeing to execute the Mortgage Deed in respect of Indage House, persuaded the Applicant in not initiating proceedings for recovery of the dues and seeking interim or ad-interim reliefs. However, despite expiry of the said 180 days, did not make payment or establish bonafides.

8. It is also stated that the Defendant No.1 & 4 has also acknowledged the debts extended by the Applicant vide letter dated 05.05.2009 and 08.09.2009 respectively.

9. It is further stated that the Applicant forwarded a letter dated 30.09.2009 to the Defendant and requested to make the payment but the Defendants failed and neglected to make the payment. Defendant No.4 forwarded a letter dated 06.01.2010 admitting having availed the facilities of aggregate amount of Rs.16 crores and purported to contend that in connection with some of the shares pledged by Defendant No.4, sold by the Applicant and the sale proceeds appropriated against outstanding principal and interest. Defendant No.4 also falsely and dishonestly sought to allege that it was agreed by the Applicant that the mortgage deed in respect of Indage House would not be considered as security, until NOC was received by the Defendant No.1 from Consortium Bankers and Sicom Ltd. for creating 2nd Charge. Defendant No.4 also curiously sought to contend that it had approached CDR Cell for complete restructuring of its liability and the CDR member had allowed the admission of the proposal and that therefore, it was not possible for the Defendant No.1 to get any NOC for the securities. Defendant No.4 by the said letter sought time frame of 30 days to present to the Applicant detailed business plan and requested the Applicant to keep on hold any action like winding up etc. till such time. Defendant No.4 suppressed the fact that the winding up petition against Defendant No.1 had already been filed/admitted. The Applicant forwarded a letter dated 02.02.2010, dealing with the contents of the said letter dated 06.01.2010 and placing on record the true and correct facts. The Applicant informed Defendant No.1 that in view of its conduct reflected from the correspondence and other records, the Applicant was not willing to wait and shall proceed with appropriate and suitable proceedings.

10. It is stated that the Applicant took out a Company Petition No.134 of 2010 in the Company Petition No.477 of 2009. The said company petition alongwith various other company petitions filed against Defendant No.1, were taken up by the Hon’ble High Court for hearing and final disposal on 19.03.2010. The Hon’ble Court passed a detailed order in Company Petition No.960/2009 ordering Defendant No.1 would up and directing the liquidator to take possession of the properties of Defendant No.1. The Defendant No.1 filed Appeal against the said order on 19.03.2010, wherein interim orders have passed, staying the order of winding up and other direction with certain clarifications.

11. It is also stated that since Defendant No.1 failed to repay the outstanding amounts, the Applicant issued a notice dated 30.09.2009 and called upon the Defendants to make the payment of the outstanding dues but they failed to pay the dues. Hence, the present OA.

12. Notices were issued to the Defendants. The Defendants put their appearance through counsel and filed the written statement. Record reveals that since 23.05.2018, none appeared on behalf of the Defendants.

13. In the written statement, the Defendants have denied each and every averments made in the OA including availment of the loan facilities, execution of loaning and security documents.

14. During the pendency of the OA, the Defendant No. 1 Company has been ordered to be wound up in pursuant to the Order dated 19.03.2010 passed by the Hon’ble Bombay High Court in Company Petition No.960 of 2009 and an Official Liquidator has been appointed for the Defendant No.1 Company. The Official Liquidator appeared and filed its written statement.

15. The Defendant No. 4 Company has also been ordered to be wound up in pursuant to the Order dated 26.09.2014 passed by the Hon’ble High Court of Bombay in Company Petition No.198/2011 and an Official Liquidator has been appointed for the Defendant No.4 Company. The Official Liquidator appeared and filed its written statement.

16. In rejoinder to the Written Statement filed by the Official Liquidator of Defendant No.1 & 4, the Applicants have denied each and every averments made in the written statement and reiterated the averments made in the OA.

17. The Applicant has produced all the Original Loan documents and other relevant documents along with their Claim Affidavit filed through Harish Kumar Acharya, Vice-President.

18. The Defendants have filed their CAOD however, no documentary evidence has been filed on their behalf.

19. I have heard the Ld. Counsel for the Applicant and perused the record. Despite opportunities, none appeared on behalf of the Defendants to argue the matter.

20. Now hereinafter, I would like to decide the issue raised by the Defendant No.1 & 4 in their written statement.

21. In their respective written statement, the Official Liquidator of Defendant No.1 & 4 have taken similar grounds. It is stated that on

passing of the winding up order all assets and the properties of the company are deemed to be in the custody of the Court in terms of Section 456 of the Companies Act, 1956 thus, any claim/debts etc. against the company are to be proved in accordance with the provision of 528 of the Companies Act read with Rule 154 of the Companies (Court) Rules, 1959. Further, the Applicant has to prove that a charge has been created in terms of the provisions of the Section 125 of the Companies Act, 1956 failing which he will be considered as an ordinary creditor. The Official Liquidators stated that the settled position in law as on date as laid down in the judgment of Hon’ble Apex Court in Official Liquidator of UP & Uttarakhand Vs. Allahabad Bank (2013 4 SCC 381 is that there should be active participation by at the official liquidator in sale matter as he is a statutory trustee of assets of the company and a representative of workers (a secured creditor by operation of law i.e. Section 529A of the Companies Act, 1956) and the official liquidation shall be associated at all stage of sale of the asset/property of the company to ensure the better transparency & maximum realisation of sale proceeds. On the other hand, the Applicant has objected on the written statement filed by the Official Liquidators. It is stated that the provisions of the RDBI Act supersede and override the provisions of the Companies Act and the Rules in connection therewith, to the extent of inconsistency. To support the said submissions, the Applicant also relied upon the judgment of Hon’ble Apex Court in the matter of Official Liquidator of UP & Uttarakhand (supra).

Record reveals that the Defendant No.1 Company (In Liqn) vide letter dated 02.06.2009 (Exb.D) offered additional security of the Agriculture Land situated at Village Yedgaon (Bhorwadi), Taluka Junnar, District Pune. The said offer of Defendant No.1 was duly accepted by the Defendant No.4 vide its letter dated 02.06.2009 (Exhibit-E) and the Defendant No.4 gave no objection in extending the mortgage on the said agriculture land. Thereafter, the Applicant vide their letters dated 03.06.2009 (Exhibit F Colly) and (Exb.F-1) duly accepted the offer of extension of mortgage made by Defendant No.1 & 4 which letter was duly acknowledged by the Defendant No.1 & 4. Pursuant to the same, the Deed of Mortgage dated 24.06.2009 (Exb.G Colly) and Deed of Rectification dated 24.06.2009 (Exb.G1) were executed and registered with the Sub-Registrar of Assurance, Narayangaon, inter alia recorded creation of mortgage and extension of mortgage of the said Agriculture land. In view of the above, the Applicant is entitled to recover their dues from the secured assets/mortgaged property.

22. Insofar as the written statement filed by the Defendant No.2, 3 & 5 is concerned, 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 alongwith their CAOD including the Guarantee Agreements and Corporate Guarantee executed by the Defendant No.2, 3 & 5. 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 against Defendants. Therefore, I do not find any merit in the objection raised by the Defendants and same is hereby rejected.

23. In the light of above discussions, the Original Application by the Applicant Bank deserves to be allowed against the Defendants.

O R D E R

(i) The present O.A. is hereby allowed and Defendant No.1 to 5, are hereby directed to pay to the Applicant Bank, within a period of 60 days, a sum of Rs.6,60,30,124.47 (Rupees Six Crores Sixty Lakhs Thirty Thousand One Hundred Twenty Four and paise Forty Seven only) as on 16.09.2009 with further interest @24% p.a. with monthly rests from 17.09.2009 till its realization.

(ii) Failing which the aforesaid amount shall be recovered from the sale of mortgaged property, hypothecated assets as well as other personal moveable and immoveable assets of the Defendant No.2, 3, 5.

(iii) Defendant No.2, 3, 5 are hereby directed not to deal with their properties till further direction of Ld. Recovery Officer.

(iv) The Official Liquidators of the Defendant No.1 and Defendant No.4 are hereby directed to file their status report before the Ld. Recovery Officer of this Tribunal.

(v) Defendants shall also pay the cost and expenses of the OA/TA.

(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: 22.11.2023

Presiding Officer,

DRT-1, Mumbai SC/-