SVC CO OPERATIVE BANK LIMITED vs M/S PRAHLADRAI FABRICS LTD on 30 November 2023

J U D G M E N T

1. The present TOA has been filed by the Applicant for recovery Rs.8,89,29,647.86 (Rupees Eight Crores Eighty Nine Lakh Twenty

Nine Thousand Six Hundred Forty Seven and Paise Eighty Six Only) under Cash Credit Facility/Working Capital Facility with further interest thereon at the contractual rate with monthly rest from 06/10/2013 till its realization and as per the Particulars of Claim of the OA/TA.

2. Facts as succinctly set out in the TOA are that the Defendant No.1 is the Limited Company and the Defendant No. 2 and 3 are the Directors as well as Guarantors for the due repayment of the facilities availed by the Defendant No.1. Defendant Nos. 4, 5 and 6 are the Banks who disbursed certain credit facilities to the Defendant No.1 and are the proforma parties and no monetary reliefs claimed against them.

3. It is stated that, since 2004, the Defendant No.1 had availed of various credit facilities from the Defendant No.4 viz. Bank of India, in the form of Working Capital Term Loan for a sum of Rs.16 Crores and created equitable mortgage of the immovable property of Shop No.3-C, admeasuring 355 sq.ft. alongwith 312 sq.ft. tin roof covered area on ground floor, bearing Survey No. 2298 of Bhuleshwar Division, Building No. 3-C, Guru Ashish, Jaihind Estate, Bhuleshwar, Mumbai 400002, owned by the Defendant No.2 and subsequently extended from time to time by constructive delivery and deposit of title deeds on 02.02.2005, 16.06.2006, 30.08.2007, 29.12.2007 and 19.09.2008.

4. In or about in August, 2009 the Defendant No.1 approached the Applicant with a request for Cash Credit Facility of Rs.1000 Lakh and the Applicant considered the request of the Defendant No.1 and sanctioned/granted the Cash Credit Facility of Rs.1000 Lakh vide Sanction Letter dt.17.08.2009, on the terms and conditions mentioned therein.

5. In consideration of sanction the said Cash Credit Facility/Working Capital Facility, the Defendants executed the following loaning and Security Documents on 25.09.2009:-

a. Demand Promissory Note.

b. Continuing Security Bond.

c. Agreement in respect of Invoice cum trade bills.

d. Agreement for collection/discount of bills/hundis/cheques.

e. Declaration.

f. Power of Attorney.

6. It is stated that in order to further secure the due repayment of the said Cash Credit Facility the Defendant No.1 in terms of Composite Hypothecation Agreement dt.25.09.2009, hypothecated present and future stocks of raw material, goods in process of manufacture and all finished and manufactured goods and articles, in favour of the Applicant.

7. It is further stated that the Defendant No.2 and 3 in terms of Deed of Guarantee dated 25.09.2009, agreed and guaranteed the due repayment of the said credit facility availed by the Defendant No.1, to the Applicant in case of default by the Defendant No.1 along with interest thereon at the agreed rate and all other cost, charges and expenses as mentioned therein.

8. It is further stated that with a view to meet part of the Working Capital requirement and in addition to or in replacement of existing facilities sanctioned by the Defendant No.4, 5, 6 and the Applicant herein, on the request of the Defendant No.1, the Defendant No.4, 5, 6 along with the Applicant agreed to joined in consortium in terms of Inter-Se-Agreement dated 21.02.2011 and thereby designated Defendant No.4 i.e. Bank of India as the Lead member, sanctioned and granted the following working capital facility to the Defendant No.1 : Sr. No. Name of the Participating members Fund based Limits (In Crores

1. Bank of India (Defendant No.4) 16.00

2. Allahabad Bank (Defendant No.5) 9.00

3. Syndicate Bank (Defendant No.6) 3.00

4. Shamrao Vithal Co-operative Bank Ltd. (Applicant) 10.00

TOTAL 38.00

9. In pursuance to the aforesaid sanction of Working Capital Facility, the Defendant No.1 in terms of Joint Deed of Hypothecation dated 21.02.2011, hypothecated all current assets and plant and machinery including movables in favour of the Applicant as well as the member of the consortium members i.e. Defendant No. 4 to 6.

10. In order to further secure the due repayment of the aforesaid Working Capital Facility, the Defendant No.2 attended the office of the Defendant No.4 on 22.02.2011 and given consent to hold as and by way of constructive delivery of the title deeds in respect of the immovable property viz. Shop No.3-C, admeasuring 355 sq.ft. alongwith 312 sq.ft. tin roof covered area on ground floor, bearing

Survey No. 2298 of Bhuleshwar Division, Building No. 3-C, Guru Ashish, Jaihind Estate, Bhuleshwar, Mumbai 400002, deposited with the Defendant No.4 way back on 02.02.2005, 16.06.2006, 30.08.2007, 29.12.2007 and 19.09.2008 in respect of the said property to continue to hold the said title deeds not only itself but also an agent of the Defendant Nos. 5, 6 and the Applicant herein to secure the due repayment of the aforesaid facilities sanctioned by the Applicant in consortium with the Defendant Nos. 4,5 and 6.

11. It is stated that the said facilities also secured by the collateral security of the exclusive charge on the Fixed Deposits of Rs.1,77,07,397.00 deposited with the Applicant Bank by the Defendant No.1.

12. It is stated that in or about 25.03.2013, the Defendant no.1 requested to release Fixed Deposit amount in their account upto March urgently, as facing shortage of funds and also assured the released amount will be given back in the form of fresh Fixed Deposit upto 30.06.2013. On the request of the Defendant no.1, the Applicant out of five FDL (Deposited as collateral Security), proceeded and credited an amount of Rs.72.00 Lakh against two FDL No. 6813 and FDL No. 6812 in favour of the Defendant No.1.

13. However, the Defendants availed the said Credit Facilities but failed to maintain its account regularly with the Applicant Bank. Thus, the account was classified as NPA on 30.09.2013. Thereafter, the Applicant Bank served various Letters and reminders to the Defendants to regularize the account but Defendants did not pay any heed to such requests. Hence, the present TOA /OA has been filed.

14. During the pendency of the O.A./ TA, the Defendant No.1 Company has been ordered to be wound up by the Hon’ble Bombay High Court vide order dated 27.11.2017 in Company Petition No.565/2014 and appointed the Official Liquidator for the Defendant No.1 Company

15. Notices were issued to the Defendants. Counsel for the Defendant nos. 1, 2, 3, 4 and 5 appeared and filed their respective Written Statements.

16. During the pendency of the OA, the Defendant No.1 Company has been ordered to be wound up by the Hon’ble Bombay High Court vide order dated 27.11.2017 in Company Petition No.565/2014 and appointed the Official Liquidator for the Defendant No.1 Company. Record reveals that the notice was issued to the Official Liquidator however, despite service, none appeared for the Official Liquidator thus, it was proceeded ex-parte vide order dated 06.11.2023.

17. In the written statement filed by the Defendant No.2 to 3, they have raised the following objections that:

(i) The Applicant has not filed/produced the complete statement of account;

(ii) The Applicant has suppressed the various material facts and particulars from this Tribunal.

18. In their respective written statements, the Defendant No.4 & 5 have stated that the Applicant is entitled as member of consortium, over the properties of the Defendant No.1 & 2 on pari passu basis.

19. The Applicant Bank has produced all the Original Loan documents and other relevant documents along with their Claim Affidavit filed

on 10.06.2015 through their authorised officer and Manager, Ms. Megha Majagaonkar.

20. The Defendant No.2 & 3 also filed their Claim Affidavit however, no documentary evidence has been placed on record.

21. I have heard the Ld. Counsel for the Applicant Bank and Defendants except Defendant no.1, and perused the record.

22. Now hereinafter, I would like to decide the issue raised by the Defendant No.2 to 5 in their respective written statements.

23. The Defendant No.2 & 3 have raised the first objection that the Applicant has not produced the complete statement of account before this Tribunal.

I have perused the record, it reveals that the Applicant has produced the complete statement of Accounts under “Annexure P” of Completion of Documents of OA alongwith the IT Certificate. The Defendant No.2 & 3 have failed to specify any single entry in the statement of account which is incorrect. Therefore, the objection raised by the Defendant No.2 & 3 is baseless hence, same is hereby declined.

24. The next objection raised by the Defendant No.2 & 3 is that the Applicant has suppressed the various material facts and particulars from this Tribunal.

The Defendant No.2 & 3 have not explained which material fact required for the just decision of the case has been twisted or suppressed by the Applicant. I have gone through the O.A. It contains all the material facts required for the just decision of the case. The objection raised by the Defendant No.2 & 3 is devoid of force hence, rejected.

25. In so far as written statements filed by the Defendant No.4 & 5 is concerned, the amount which shall be recovered from the mortgaged property, be distributed amongst the Applicant and Defendant No4 to 6 as per their pari passu charge. The Defendant No.4 to 6 may approach to the Ld. Recovery Officer for their pari passu charge.

26. The witness of the Applicant Bank has fully corroborated the averments made in the OA/TOA, even otherwise the whole case of the Applicant is based on documents and the witness has duly proved all these documents as against the Defendant No.1 to 3. 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 against Defendant No.1 to 3. The Defendant No.4 to 6 are the proforma parties.

27. In the light of above discussions, the Transfer Original Application deserves to be allowed against the Defendant No.1 to 3.

O R D E R

(i) I allow the present OA and direct the Defendant No.1 to 3 to pay to the Applicant Bank, within a period of 60 days, a sum of Rs.8,89,29,647.86/- (Rupees Eight Crores Eighty Nine Lacs Twenty Nine Thousand Six Hundred Forty Seven and Paise Eight Six only) under Cash Credit Facility/Working Capital Facility with further interest thereon at the contractual rate with monthly rest from the date of filing of the present OA/TA

till its realization (after adjusting the amount, if any, recovered during the pendency of the OA).

(ii) Failing which the aforesaid amount shall be recovered from the sale of mortgaged properties, hypothecated assets as well as other personal movable and immovable assets of the Defendant Nos.2 & 3.

(iii) Defendants Nos.2 to 3 are hereby directed not to deal with their properties till further direction of Ld. Recovery Officer.

(iv) The Official Liquidator of the Defendant No.1 is hereby directed to file the status report before the Ld. Recovery Officer.

(v) It is made clear that the amount which shall be recovered from the mortgaged properties as well as hypothecated assets, be distributed amongst the Defendant No.4 to 6 as per pari passu charge.

(vi) Defendants nos.1 to 3 shall also pay the cost and expenses of the TA.

(vii) 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 : 30.11.2023

Presiding Officer, DRT-1, Mumbai

SP/-