Edelweiss Asset Reconstruction Company Limited vs M/S FIRSTWINNER INDUSTRIES LTD on 18 October 2023

J U D G M E N T

1. The present OA has been filed by the original Applicant i.e. State Bank of India against the Defendants before the Ld. DRT-III, Mumbai, which stands transferred to this Tribunal as per Govt. Notification dated 26.09.2016 and registered as TA No. 539/2016. The OA/TA has been filed for recovery of following amount;

a. Rs. 33,23,09,505.27 (Rupees Thirty Three Crores Twenty Three Lakhs Nine Thousand Five Hundred Five and Twenty Seven Paise Only) under the Credit facility with further interest thereon at 4.75% above base rate of the Applicant 9.75 % presently at 14.50% p.a. at monthly rests

b. Rs.38,82,90,607.05 (Rupees Thirty Eight Crores Eighty Two Lakhs Ninety Thousand Six Hundred Seven and Five Paise Only) under the Term Loan facility which include Rs.4,60,55,663.34 in Term Loan-1, Rs.32,32,36,475.26 in Term Loan-2 and Rs.1,89,98,468.45 in Term Loan-3, with further interest @14.70%,, @ 14.65% & @16.00% till the date of full and final payment and/ or realization.

Aggregating to sum of Rs. 72,06,00,112.29 (Rupees Seventy Two Crores Six Lakhs One Hundred Twelve and Twenty Nine Paise) with interest as mentioned above.

2. During the pendency of the OA, the State Bank of India (hereinafter referred to as “the Assignor Bank”) has assigned the debt of the

Defendants in favour of the Applicant (Assignee) vide Assignment Agreement dated 19.03.2014.

3. Facts as succinctly set out in the O.A./T.A are that the Defendant No.1 is the limited company (formally known as First Winner Trading Company Private Limited) and Defendant No. 2 to 5 are the guarantors of Defendant No. 1. The Defendant No.1 through Defendant No. 2 vide its application dated 14.07.2004 approached the Assignor Bank and requested to sanction to Defendant No. 1 Demand Cash Credit Facility of Rs. 2.75 Crores and Letter of Credits facility of Rs. 1.00 Crore (aggregating to sum of Rs. 3.75 Crore). The Assignor Bank considered the said request and vide its sanction letter dated 17.09.2004 conveyed its approval to the Defendant No. 1 for the sanction of the said facilities.

4. In consideration of sanction the said loan facilities, the Defendant No. 1 executed the various loaning and security documents on 05.10.2004 which includes Agreement of Loan for Overall Limit; Agreement of Hypothecation of Goods and Assets. The Defendant No. 2, 4 & 5 executed their separate Deed of Guarantee all dated 05.10.2004.

5. In order to further secure the said loan facility, Defendant No. 2 being the Director of Defendant No. 1 & 4 attended the office of Assignor Bank on 25.10.2004 and deposited title deeds with respect to (1) Office No. 201, Raji Commercial Complex, P. L. Lokhande Marg, Chembur Mumbai 400 089 (2) Industrial Gala No. 8 & 12 of G. P. H. No. 266, Gupta Compound, near Anjur Phatak, Bhivandi of Defendant No.1 and (3) Shop No. 6 to 8 Raji Commercial Complex, P. L. Lokhande

Marg, Chembur, Mumbai 400 089 of Defendant No.1, with an intention to create mortgage of the aforesaid properties to secure the dues payable by the Defendant No.1 to the Assignor Bank and the same was recorded in Memorandum of Deposit of Title Deeds for creation of charge for overall limit dated 25.10.2004.

6. It is further stated that Defendant No. 1 through Defendant No. 2 approached the Assignor Bank and requested to enhancement of the aforesaid credit facilities of Defendant No. 1 from Rs. 3.75 Crores to Rs. 6 Crores vide their application dated 09.06.2005. The Assignor Bank considered the said request of the Defendant No. 1 and enhanced the said credit facilities vide its sanction letter dated 10.08.2005.

7. In consideration of sanction the said Cash Credit Facility, the Defendants executed the following loaning and security documents on 18.08.2005:

a. Supplemental Agreement of Loan for increase in the Overall limit

b. Supplemental Agreement of Hypothecation of Goods and Assets for increase in the overall limit

c. Two Supplemental deed of guarantee for increase in overall limit one by the Defendant No. 2 & second by Defendant No. 4 & 5.

8. In order to secure the said enhanced credit facility Defendant No. 2 being the Director of Defendant No.4 attended the office of Assignor Bank on 26.08.2005 and deposited title deeds with respect to (1) Office unit No. 301, 3rd Floor in the building known as ‘Unique Towera’

Unique Premises Co-operative Society Limited situated at Gaiwadi Industrial Estate, Off: S. V. Road, Goregaon (W), Mumbai- 400 062;

(2) Shop No. 10 on ground floor of the Building known as ‘Gokul’ of New Evershine CHS Ltd., Malad (West), Mumbai- 400 064 with an intention to create mortgage of the aforesaid properties of Defendant No.4 to secure the dues payable by the Defendant No.1 to the Assignor Bank and also confirmed by giving oral assent for constructive delivery to hold and retain the title deeds originally deposited on 25.10.2004 in respect of mortgaged properties of Defendant No.1 & 4, with the Assignor Bank, and shall continue to remain deposited with the Assignor Bank as a security. The same was recorded in Memorandum of Deposit of Title Deeds for creation of charge for overall limit dated 25.10.2004:

9. It is also stated that Defendant No. 1 through Defendant No. 2 approached the Assignor Bank and requested to enhancement of the aforesaid credit facility of Defendant No. 1 from Rs. 6 Crores to Rs. 19.40 Crores vide their application dated 08.02.2006. The Assignor Bank considered the said request of the Defendant No. 1 and enhanced the said credit facilities vide its sanction letter dated 05.06.2006.

10. In consideration of sand enhancement, the Defendants executed the following loaning and security documents on 13.06.2006:

a. Supplemental Agreement of Loan for increase of the overall limit

b. Supplemental Agreement of Hypothecation of Goods and Assets for increase in the overall limit c. Three Supplemental deed of guarantee for increase in overall limit one by the Defendant No. 2, 4 & 5.

11. In order to secure the said enhanced credit facility, Defendant No. 2 in his personal captivity attended the office of Assignor Bank on 29.07.2006 and deposited title deeds of his property with an intention to create mortgage the flat i.e. Flat No. 403 & 404 on 4th Floor of ‘A’ Wing of the Building known as ‘Dhiraj Solitaire’ Chincholi Bunder Road, Malad (W). Further, the Defendant No.2 being Director of Defendant No.1 & 4 given oral assent for constructive delivery to hold and retain the title deeds originally deposited on 25.10.2004 and delivery constructively on 26.08.2005 in respect of mortgaged properties of Defendant No.1 & 4 as well as title deeds originally deposited on 26.08.2005 in respect of the properties of Defendant No.4. The same was also recorded in Memorandum of Entry Recording Oral Assent or Constructive Delivery of Title Deeds and Deposit of Title Deeds for creation of mortgage/charge for overall limit dated 29.07.2006.

12. It is further stated that Defendant No. 1 through Defendant No. 2 approached the Assignor Bank and requested to sanction the adhoc facilities of letter of credit of Rs. 1 Crore. The Assignor Bank considered the said request of the Defendant No. 1 and sanctioned the adhoc facility.

13. In consideration of sanction the said Facility, the Defendants executed the following loaning and security documents on 09.03.2007:

a. Supplemental Agreement of Loan for increase of the overall limit

b. Supplemental Agreement of Hypothecation of Goods and Assets for increase in the overall limit

c. Three Supplemental deed of guarantees for increase in overall limit executed by the Guarantors No. 2, 4 & 5.

14. It is further stated that Defendant No. 1 through Defendant No. 2 approached the Assignor Bank and requested to enhancement of the aforesaid credit facility of Defendant No. 1 from Rs. 20.40 Crores to Rs. 22.40 Crores vide their application dated 28.06.2007. The Assignor Bank considered the said request of the Defendant No. 1 and enhanced the said credit facilities vide its sanction letter dated 19.10.2007.

15. In consideration of said enhancement, the Defendants executed the following loaning and security documents on 30.11.2007:

a. Supplemental Agreement of Loan for increase of the overall limit

b. Supplemental Agreement of Hypothecation of Goods and Assets for increase in the overall limit

c. Two Supplemental deed of guarantee for increase in overall limit one by the Defendant No. 2 & 3 & second by the Defendant No. 4 & 5.

16. It is further stated that Defendant No.2 being the Director of Defendant No.1 & 4 and in his personal capacity being Guarantor attended the office of Assignor Bank on 30.11.2007 and gave oral consent for constructive delivery to hold and retain the tile deeds deposited on 25/10/2004 and delivered constructively on

26/08/2005 and 29/07/2006 with the Assignor Bank in respect of the mortgaged properties of Defendant No.1, 2 & 4 with an intention to create the extension of mortgage/ charge on the said properties to secure the outstanding dues.

17. It is further stated that Defendant No.1 through Defendant No. 2 approached the Assignor Bank and requested to sanction enhancement of the aforesaid credit facility of Defendant No. 1 from Rs. 22.40 Crores to Rs. 71.86 Crores vide their application dated 18.01.2010. The Assignor Bank considered the said request of the Defendant No. 1 and enhanced the said credit facilities vide its sanction letter dated 14.05.2010.

18. In consideration of said enhancement, the Defendants executed the following loaning and security documents on 18.05.2010:

a. Supplemental Agreement of Loan for increase in the overall limit

b. Supplemental Agreement of Hypothecation of Goods and Assets for increase in the overall limit

c. Tow Supplemental deed of guarantee for increase in overall limit i.e. one form Defendant No. 2 to 3 and from 4 & 5.

19. In order to further secure the said enhanced credit facility, Defendant No. 2 being the Director of Defendant No. 1 attended the office of Assignor Bank on 31.12.2010 and deposited title deeds with respect to (1) Plot No. N-66, in the Tarapur Industrial Area within the Village limits of Pamtembhi and outside the Municipal limits in rural area, Tal- Registration Sub District Palghar owned by Defendant No. 1; (2) 25 Flats in the Building complex known as ‘Shubh Griha’ in Village:

Betegaon, Tal: Palghar, District: Thane (M.S.) of Defendant No.1, with an intention to create mortgage and duly created equitable mortgage of the aforesaid properties. The Defendant No.2 also given oral consent for constructive delivery to hold and retain the title deeds originally deposited on 25.10.2004 and delivery constructively on 26.08.2005, 29.07.2006 and 30.11.2007 in respect of mortgaged properties of Defendant No.1, 2 & 4. The same was also recorded in Memorandum of Entry Recording Oral Assent or Constructive Delivery of Title Deeds and Deposit of Title Deeds for creation of mortgage/charge for overall limit dated 31.12.2010.

20. It is further stated that Defendant No. 1 through Defendant No. 2 & 3 approached the erstwhile State Bank of Indore Malad branch, Mumbai and requested to sanction credit facility Rs. 6 Crores on 25.08.2006. The said request was considered by the erstwhile State Bank of Indore and in consideration therefore, the Defendants executed the necessary loaning and security documents on 28.08.2006 which includes Agreement of Loan for overall limits, Agreement of Hypothecation of Goods and Assets; Two Deed of Guarantee for Overall limit of Rs. 6 Crores. Thereafter, the State Bank of Indore was merged with the Assignor Bank i.e. State Bank of India with effect from 26/08/2010 by way of the Gazette of India Notification No. GSR 638 (W) dated 28/07/2010.

21. It is further stated that the Defendants by their revival letters dated 09.03.2007, 10.02.2010, 31.07.2010 and 31.03.2011 duly confirmed the execution of various security documents in favour of the Assignor Bank.

22. However, the Defendant No. 1 failed to adhere the financial discipline and committed defaults in repayment of the loan amount thus, the account was declared as NPA on 28.07.2012. Thereafter, the Assignor Bank issued the recall notice under Section 13 (2) of the SARFAESI Act, 2002 dated 10.11.2012 and called upon the Defendants to make the payment of the outstanding dues but they failed to pay the dues. Further, the Assignor Bank by its Advocate’s Notice dated 05.12.2012 called upon the Defendants to pay the outstanding dues but no avail. Hence, the present OA has been filed.

23. Notices were issued to the Defendants. Despite service, no one appeared for the Defendants thus, they were proceeded ex-parte vide order dated 10.08.2023.

24. The Applicant Bank has filed and produced all the relevant documents and original documents alongwith their claim affidavit filed through their Authorized Signatory Mr. Sagar Seth.

25. I have heard the Ld. Counsel for the Applicant and gone through the record.

26. 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 5 is joint and several.

27. In the light of above discussions, the Original Application deserves to be allowed against the Defendant No.1 to 5.

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, jointly and severally, within a period of 60 days, the following sums: a. Rs.33,23,09,505.27 (Rupees Thirty Three Crores Twenty Three Lakhs Nine Thousand Five Hundred Five and paise Twenty Seven only) under the Credit facility alongwith further interest at 14.50% p.a. with monthly rests, from the date of filing of the present OA till its realization. b. Rs. 38,82,90,607.05 (Rupees Thirty Eight Crores Eighty Two Lakhs Ninety Thousand Six Hundred Seven and paise Five only) under the Term Loan facilities alongwith further interest @14.70% in Term Loan-I, @ 14.65% in Term Loan-II & @16.00% in Term Loan-III, from the date of filing of the present OA till its realization.

Aggregating to sum of Rs.72,06,00,112.29 (Rupees Seventy Two Crores Six Lakhs One Hundred Twelve and paise Twenty Nine only) with interest as mentioned above.

(ii) Failing which the aforesaid amount shall be recovered from the sale of mortgaged properties of Defendant No.1, 2, 4 as well as other personal moveable and immoveable assets of the Defendants.

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

(iv) Defendants 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 : 18.10.2023

Presiding Officer,

DRT-1, Mumbai

Tjs/-