Edelweiss Asset Reconstruction Company Limited vs M/S INDAGE VINTNERS LIMITED on 4 March 2021

J U D G M E N T

1. The Original Application has been filed by the State Bank of India (SBI) against the Defendant No.1 to 10 for recovery of Rs.133,12,35,733.49 (Rupees One Hundred Thirty Three Crores Twelve Lakhs Thirty Five Thousand Seven Hundred Thirty Three and paise Forty Nine only) together with interest at 0.50% above SBAR i.e. 15.25% p.a. with monthly rests from the date of filing of the present OA till payment and/or realization.

2. Facts as succinctly set out in the OA are that the Defendant No.1 (now under liquidation) engaged in the business of production of Wine and Champagne, is represented by Defendant No.2 (Official Liquidator). The Defendant No.3 to 5 are individual directors who have stood as Guarantors in their personal capacity and Defendant No.6 to 9 are Corporate entities who have executed corporate guarantee and Defendant No.10 is the Mortgagor who have mortgaged their property to secure the limits. The Defendant No.11 is the assignee of consortium member UCO Bank and Defendant No.12 to 14 are other consortium members banks. The Defendant No.15 to 20 are corporate entities/banks who are also claiming charge over properties which are charged to Assignor Bank.

3. It is stated that the Defendant No.1 approached the Assignor Bank i.e. State Bank of India (SBI) for financial assistance for business requirements. The said request was considered by the SBI and sanctioned credit facilities aggregating to Rs.46.07 crores vide their sanction letter dated 29.09.2005. The SBI revised the credit facilities, in consortium with UCO Bank and ICICI Bank being other consortium members by sanction letter dated 10.03.2006 to the aggregate limit of Rs.46.07 crores wherein the SBI sanctioned Demand Cash Credit (in short DCC) Facility of Rs.10.00 crores, and Bank Guarantee Limit (BG) of Rs.1.00 Crores both under Consortium and Term Loan (in short TL) for Rs.14.57 Crores individually (not under Consortium) sanctioned by the SBI. Again with further reference to sanction letter dated 29.09.2005 and 10.03.2006, the SBI revised credit facilities, in consortium by sanction letter dated 11.03.2006 to the aggregate limit of Rs.44.07 crores wherein the SBI sanctioned Demand Cash Credit Facility of Rs.10 crores and Bank Guarantee Limit of Rs.1 crore under consortium and Term Loan of Rs.14.57 crores individually (not under Consortium) to Defendant No.1. The Defendant No.1 accepted the terms and conditions of the sanction letter vide Board Resolution dated 21.03.2006. The Defendant No.6 & 7 also passed Board Resolution on 21.03.2006 for executing Corporate Guarantee and creating necessary charges in their assets to secure the said facilities.

4. In consideration of and to secure the said facilities availed by the Defendant No.1, the various loaning and security documents were executed by the Defendants on 23.03.2006 which includes Working Capital Consortium Agreement; Joint Deed of Hypothecation;

Inter Se Agreement; Deed of Guarantee Defendant No.3 to 5; Deed of Guarantee executed by Defendant No.6 to 8; Letter of Undertaking etc.

5. In order to secure the Term Loan of Rs.14.57 crores, the Defendant No.1 executed the various loaning and security documents on 03.04.2006 which includes Agreement of Loan over overall limit; Agreement of Hypothecation of Goods and Assets; Deed of Guarantee for overall limit by Defendant No.3 to 8; Letter regarding grant of individual limits within the overall limit.

6. It is further stated that on 15.11.2006, Defendant No.10 pursuant to Board Resolution and Defendant No.1 pursuant to board resolution dated 07.11.2006, to secure the DCC Limit of Rs.10 Crores, BG of Rs.1 crores and TL of Rs.14.57 crores (Total Rs.25.27 crores), of Assignor Bank (SBI) by way of First Charge and the rest of other banks as second charge with an aggregate amount of Rs.44.07 crores for consortium executed Deed of Mortgage on the file of the Sub-Registrar Office, Narayangaon creating mortgage over their following immovable properties: i. Immovable property being Non-Agricultural Land bearing Survey No.202, Hissa No.5, adm; 0.84 H.R. Survey No.203, Hiissa No.3, admg. 0-13 H.R. Surey No.203, Hissa No.8, admg. 0-12, H.R. Survey No.203, Hissa No.11, admg. 0-66 H.R. and Survey No.203, Hissa No.16, admg. 0-17 H.R. situated at Village Yedgaon, Taluka Junnar, Dist. Pune, within the Registration District of Pune & Sub-District of Narayangaon.

ii. Immovable property being Non-Agricultural Land bearing Survey No.202, Hissa No.2, adm; 1-74 H.R. Survey No.202, Hiissa No.3, admg. 0-76 H.R. Surey No.203, Hissa No.13, admg. 3-39, H.R. Survey No.203, Hissa No.6, admg. 0.14 H.R. situated at Village Yedgaon, Taluka Junnar, Dist. Pune, within the Registration District of Pune & Sub-District of Narayangaon. iii. Immovable Property being Non-Agricultural Land bearing Survey No.202, Hissa No.1, adm; 0.89 H.R. Survey No.202, Hiissa No.4, admg. 1-25 H.R., Surey No.203, Hissa No.4, admg. 0.21, H.R. Survey No.203, Hissa No.9, admg. 0.11 H.R. situated at Village Yedgaon, Taluka Junnar, Dist. Pune, within the Registration District of Pune & Sub-District of Narayangaon iv. Immovable property being Non-Agricultural Land bearing Survey No.207, Hissa No.5, admn 4 hectares situated at Village Yedgaon, Taluka Junnar, Dist. Pune, within the Registration District of Pune & Sub-District of Narayangaon.

7. It is further stated that the Defendant No.6 pursuant to their Board Resolution dated 21.03.2006 to secure an amount of Rs.44.07 crores executed Deed of Mortgage on 01.12.2006 on pari passu charge and registered as Document No.12104/2006 on the file of the Joint Sub- Registrar Office Mumbai City-1, creating mortgage over their immovable property i.e. All that piece and parcel of land or ground hereditaments and premises together with building standing thereon and containing an area of the 1224.09 sq. mts. or thereabouts situate lying and being at Worli and bearing Plot No.82 of the Scheme 58 Worli Estate of the corporation in the City and Island or Mumbai in the Registration District & Sub District of Bombay City & Bombay Suburban bounded as follows:

On the North by Plot No.82 of the said Estate On the East by 110 feet, Dr. Annie Besant Road, On the South by Plot No.81 of the said Estate and On the West by 50 feet road which piece of land bears Cadastral Survey No.941 of Worli Division

8. Further, the Defendant No.1 also pledged their 10,00,000/- equity share to secure the aforesaid limits aggregating to Rs.44.07 crores.

9. It is also stated that the Defendant No.1 vide its application dated 29.09.2006 approached the Defendant No.12 for enhancement/revision in the various credit facilities. The said request was considered by the Defendant No.12 and revised/enhanced their working capital facility of Rs.20 crores from Rs.6 crores.

10. In consideration of availing the said facility, the various loaning and security documents were executed by the Defendant No.1 on 29.03.2007 which includes Supplemental Working Capital Consortium Agreement; Supplemental Joint Deed of Hypothecation and Interse Agreement.

11. It is further stated that the Defendant No.1 again approached the Assignor Bank (SBI) for enhancement/revision in the various credit facilities. The said request was considered by the SBI and enhanced the DCC from Rs.10.00 crores to Rs.35 crores, BG at existing limit of Rs.1.00 crores with aggregate limit of Rs.68.50 crores, vide sanction letter dated 26.04.2007. The Defendant No.1 vide Board Resolution dated 03.05.2007 accepted the terms and conditions of the said sanction letter.

12. In consideration of sanction the said facilities, the Defendant No.1 executed the various loaning and security documents on 05.06.2007 which includes Second Supplemental Working Capital Consortium Agreement; Second Supplemental Joint Deed of Hypothecation; Second Inter se Agreement; Deed of Guarantee executed by Defendant No.3, 5 to 8; Deed of Guarantee executed by the Defendant No.4 dated 10.07.2007.

13. Further, on 14.08.2007 the Defendant No.10 and Defendant No.1 executed Supplementary Deed of Mortgage creating mortgage over their Schedule-C immovable properties to secure an amount of Rs.50.57 crores by way of first charge thus securing an aggregate Consortium Limit for Rs.83.07 crores. The Defendant No.6 also pursuant to their Board Resolution dated 03.05.2007 executed Supplementary Deed of Mortgage on 14.08.2007 creating mortgage over their immovable property Specified and more particularly described in Schedule-D securing an aggregate Consortium Limit of Rs.83.07 crores including Rs.50.57 crores of the SBI on pari passu charge.

14. It is further stated that in the meanwhile, the Defendant No.13 & 14 were inducted as Consortium Members in the Consortium Meeting held on 26.11.2007. The Defendant No.13 vide their sanction letter dated 30.06.2008 sanctioned WC Limit of Rs.15 crores and Defendant No.14 sanctioned WC Limit of Rs.5 crores vide their sanction letter dated 29.04.2008.

15. It is further stated that the Defendant No.1 again approached the SBI for enhancement/revision of credit facilities. The said request was considered by the SBI and vide sanction letter dated 29.05.2008 enhanced the DCC Limit of Rs.35 crores to Rs.50 crores and new SLOC limit of Rs.5 crores thus, enhanced existing limit of SBI from Rs.42.60 crores to Rs.62.60 crores. The Defendant No.1 vide Board Resolution dated 29.05.2008 accepted the terms and conditions of the said sanction letter.

16. In consideration of sanction the said facilities, the Defendant No.1 executed the various loaning and security documents on 09.07.2008 which includes Third Supplemental Working Capital Consortium Agreement; Third Supplemental Joint Deed of Hypothecation; Inter se Agreement among Consortium Banks including Barclays Bank and HSBC; Supplemental Deed of Guarantee executed by Defendant No.3 to 8.

17. Further, on 25.07.2008 the Defendant No.10 pursuant to their Board Resolution dated 29.05.2008 and Defendant No.1 pursuant to their Board Resolution dated 29.05.2008 executed Supplementary Deed of Mortgage and created mortgage over their Schedule-C, to secure an aggregate Consortium Limit of Rs.123.60 crores with share of SBI of Rs.62.60 crores on first pari passu basis. The Defendant No.6 also pursuant to their Board Resolution dated 29.05.2008 executed Supplementary Deed of Mortgage on 30.07.2008 and created mortgage over their immovable property (Specified and more particularly described in Schedule-D) to secure an aggregate Consortium Limit of Rs.123.60 crores on pari passu basis.

18. It is further stated that the Defendant No.1 again approached the SBI for renewal cum enhancement of credit limits and the SBI vide its sanction letter dated 13.04.2009 renewed/enhanced Fund Based Working Capital Limits DCC from Rs.50 crores to Rs.60 crores and NFB Limits (Letter of Credit & Bank Guarantee) from Rs.1.00 crores to Rs.10 crores, SLOC of Rs.5 crores maintained at existing level aggregating to Rs.75 crores of share of SBI with aggregate Consortium Limit of Rs.156 crores which excludes Term Loan outstanding of Rs.3.87 crores sanctioned individually by the SBI. The Defendant No.1, 6 & 7 passed necessary Board Resolutions and accepted the terms and conditions of the sanction in their Board meeting held on 09.06.2009.

19. In consideration of sanction the above credit facilities availed by the Defendant No.1 for an aggregate amount of Rs.156 crores, the various loaning and security documents were executed on 25.06.2009 which includes Supplemental Working Capital Consortium Agreement; Supplemental Joint Deed of Hypothecation; Inter se Agreement between SBI, UCO Bank, ICICI Bank Ltd, Barclays Bank, PLC & the Hongkong & Shanghai Banking Corporation Limited; Supplemental Deed of Guarantee executed by Defendant No.3 & 5; Supplemental Deed of Guarantee by Defendant No.6 to 8; Supplemental Deed of Guarantee by Defendant No.4 dated 20.07.2009.

20. Further, the Defendant No.6 also pursuant to their Board Resolution dated 09.06.2009 executed Supplementary Deed of Mortgage on 22.02.2009 and created mortgage over their immovable property (Specified and more particularly described in Schedule-D) to secure an aggregate Consortium Limit of Rs.159.87 crores with share of SBI of Rs.78.87 crores including outstanding Term Loan of SBI amounting to Rs.3.87 crores on first pari passu charge. It is also stated that on 30.09.2009 Defendant No.10 pursuant to their Board Resolution dated 16.07.2009 and Defendant No.1 pursuant to their Board Resolution dated 09.06.2009 executed Supplementary Deed of Mortgage and created mortgage over their Schedule-C, to secure an aggregate Consortium Limit of Rs.159.87 crores with aggregate share of SBI of Rs.78.87 crores including Term Loan outstanding of Rs.3.87 crores on first pari passu basis.

21. It is further stated that the at the request of the Defendant No.1 by letter dated 08.03.2010 for renewal of credit limits, the SBI vide its Sanction Letter dated 14.06.2010, renewed the DCC Limit with reduction of Rs.1 crores and realigned between DC and SLOC with limit of Rs.66.48 crores. The Defendant No.9 pursuant to their Board Resolution dated 16.11.2011 executed Deed of Guarantee dated 25.11.2011 and guaranteed an aggregate amount of Rs.156.00 crores availed by the Defendant No.1.

22. It is further stated that the Mortgages/Hypothecation charges created by the Borrower/Guarantors on their assets as evidenced by the Agreements of Hypothecation of Goods and Assets and Deeds of Mortgages and which are described in Schedule A, B, C & D hereunder are registered with the Registrar of Companies by filing necessary Form 8 from time to time.

23. Further, it is stated that the Defendants executed Revival Letter dated 09.06.2009 and 16.04.2012 and Balance Confirmation as on 31.03.2012 acknowledging the total debt due by them under the overall limtis and confirming that security documents executed by them in respect of immovable and moveable properties are fully enforceable against them in favour of the SBI.

24. It is further stated that after availing the aforesaid loan facilities, the Defendant No.1 failed to adhere the financial discipline and failed to regularize the accounts and repay the outstanding amount to the SBI, inspite of repeated requests and reminders. Thus, the accounts of the Defendant No.1 were referred for Restructuring and a Restructuring Proposal was also approved under CDR system by CDR EG on 10.03.2010.

25. However, the Defendant No.1 could not comply the obligations under CDR due to the winding up order passed by the Hon’ble High Court of Bombay at the instance of the unsecured creditors and Defendant No.1 existed from CDR. The Hon’ble High Court by order dated 19.03.2010 passed in Petition No.960/2009 ordered winding up and directed the Liquidator to take possession of all assets of the Defendant No.1.

26. It is also stated that the Appeal preferred by the Defendant No.1 also got dismissed by order dated 02.12.2013 by the Hon’ble High Court.

27. It is stated that the SBI through Advocates issued notice dated 07.06.2014 and called upon the Defendants to repay the aggregated amount so borrowed with interest accrued thereon but the Defendants failed to pay the dues. Further, notice under Section 13(2) was also issued on 05.02.2013 to the Defendant No.1 3 and 9 and on 07.06.2014 to Defendant No.10 to recover the dues of the SBI by enforcing the “security interest” created over the Schedule A & B moveable properties & Schedule C & D immovable properties and same was received by these Defendants however, they have not replied to the notice and also failed to pay the dues. Hence, the present OA.

28. Notices were issued to the Defendants. Despite service, none appeared on behalf of the Defendant No.3 to 10, 12 to 20. The Defendant No.3 to 10, 13 to 20 were proceeded ex-parte vide order dated 04.08.2017. The Defendant No.2, 11 put their appearance through counsel however, despite opportunities they failed to file the WS thus, right to file the WS was closed vide order dated 09.11.2017. Record reveals that since 11.01.2018 no one appeared on behalf of the Defendant No.2.

29. During the pendency of the OA, the State Bank of India assigned all the rights, title and interest in the financial facility including the

security interest in respect thereof to the Applicant vide an Assignment Agreement dated 16.12.2014.

30. Record reveals that during the pendency of the OA, the Defendant No.9 Company has been ordered to be wound up by the Hon’ble High Court of Bombay vide order dated 26.09.2016 in Company Petition No.198/2011 and an Official Liquidator has been appointed for the Defendant No.9 Company.

31. Record further reveals that the Defendant No.11 moved an application on 11.06.2015 for discharge from the present OA and stated that the contesting Defendants has settled the matter with the Defendant No.11 by making payment of Rs.6,85,00,000/- and accordingly, Defendant No.11 had issued its No Due Certificate vide its letter dated 12.03.2015, therefore, it is stated that in view of the aforesaid settlement, the Defendant No.11 ceased to have its right, title and interest in the common securities as detailed in the OA and do not have any claim against the said Defendant No.1. The said IA is disposed off vide separate order.

32. The Applicant has produced all the Original Loan documents and other relevant documents along with their Claim Affidavit filed through Angira Chakraborth, Authorized Signatory.

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

34. The witness of the Applicant has fully corroborated the averments made in the OA, 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.2 to 10. 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. The liability of the Defendant No.1 to 10 is joint and several. No relief is claimed against the Defendant No.11 to 20.

35. In the light of above discussions, the Original Application filed by the Applicant deserves to be allowed against the Defendant No.1 to 10.

O R D E R

a. The present OA is hereby allowed and Defendant No.1 to 10 are hereby directed to pay to the Applicant, within a period of 60 days, a sum of Rs.133,12,35,733.49 (Rupees One Hundred Thirty Three Crores Twelve Lakhs Thirty Five Thousand Seven Hundred Thirty Three and paise Forty Nine only) together with interest at 0.50% above SBAR i.e. 15.25% p.a. with monthly rests from the date of filing of the present OA till payment and/or realization. b. Failing which the aforesaid amount shall be recovered from the sale of mortgaged properties, hypothecated goods, assets, as well as other personal moveable and immoveable assets of these Defendants.

c. Defendant No.3 to 8 & 10 are hereby directed not to deal with their properties/assets till further direction of the Ld. Recovery Officer. d. The Official Liquidator of Defendant No.1 Company i.e. Defendant No.2 and Official Liquidator of Defendant No.9 Company are hereby directed to file their status report before the Ld. Recovery Officer of this Tribunal. e. Defendant No.1 to 10 shall also pay the cost and expenses of the OA. f. 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.

Sd/- Place: Mumbai. (Dr. Rekha G. Dhakar) Dated: 04.03.2021

Presiding Officer,

DRT-1, Mumbai