CANARA BANK vs M/S.AVADOOT TRADERS on 9 June 2026

J U D G M E N T

This is an application under Section 19(1) of the Recovery of the Debts due to Banks and Financial Institutions Act, 1993 renamed as Recovery of the Debt and Bankruptcy Act, 1993 (for short, ‘the

Act’) to recover aggregate amount of ₹5,47,88,640.00/- (Rupees Five Crores Forty- Seven Lakhs Eighty-Eight Thousand Six Hundred Forty Only) wherein ₹4,55,44,626.00/- (Rupees Four Crores Fifty-Five Lakhs Forty-Four Thousand Six Hundred Twenty-Six Only) with future interest @ 17.95% per annum plus penal interest @ 2% per annum under OCC Facility and ₹92,44,014.00/- (Rupees Ninety-Two Lakhs Forty- Four Thousand Fourteen Only) with future interest @ 16% per annum plus penal interest @ 2% per annum under Term Loan Facility with monthly rest thereon from the date of presentation of the Transferred Original Application i.e. 21.04.2014 till payment/realization and to enforce the hypothecated and mortgaged securities.

The details of the claim amount are as under: - Sr No Nature of Facility O/s. am ou nt Uncharged interest from 01.04 .2014 to 20.04 .2014 Penal Interest @ 2% per annu m Total Amount

OCC/OD BD Loan A/c. ₹4,50, 52,138 .00/- ₹4,43, 116. 00 /- ₹49, 372.00 /- ₹4,55, 44,626 .00/-

ADHOC Credit A/c. ₹91, 53, 731. 0 0/- ₹80, 252.00/ - ₹10, 031.00 /- ₹92, 44, 014. 0 0/-

- - - - ₹5,47,8 8,64 0.00/-

It is undisputed fact in the matter that the Defendant nos.1 to 5 were duly served with the summons vide order-sheet dated 09.10.2015. Despite service, the defendants did not enter their appearance and therefore, they were set ex-parte on 04.03.2016.

Defendant no.1, a Partnership Firm through its Partners and Guarantors i.e. Defendant nos.2 to 5 are the principal borrowers who approached the Applicant Bank sought financial assistance by way of OCC/ODBD Credit and Term Loan Facility. Pursuant to the loan application made by defendants, the Applicant sanctioned the loan vide Sanction Letter dated 16.04.2010 in sum of ₹2,50,00,000/- (Rupees Two Crores Fifty Lakhs Only) payable with interest Graded ROI @ 13.25% (floating) as per HO Cir 118/09 and a sum of ₹161,00,000/- (Rupees One Hundred Sixty-One Lakhs Only) payable in 84 EMIs of ₹1.75 Lakhs for first 12 months and ₹1.92 Lakhs for subsequent 71 months and last installment of ₹1.76 Lakhs (repayment to start after 6 months from the date of first disbursement and the tentative date with interest at the rate of 13.50 % per annum floating interest. Accordingly, the said loan was renewed and enhanced as given in the table below.

The details of the Sanction amount are as under: - S r N o Da te o f S a n c ti on Na tu re of F a c i li ty A m ou n t RO I P ri m a ry S e c u ri ty Co l la te ra l S e c u ri ty

1 6 . 0 4 . 20 1 0 O C C / O D B D ₹ 2 , 5 0 , 00 , 0 0 0 / - G r a d e d R O I @ 1 3 . 2 5% (f l o a t in g ) a s p e r H O Cir 1 1 8 / 0 9 H y p o th e c a tio n b o o k - d e b ts a n d S to c k s -

Te rm Lo a n ₹ 1 , 6 1 , 00 , 0 0 0 / - 1 3 . 5 0 % p e r a n n u m f lo a t in g in te r e s t.

(1 ) H y p o th e c a tio n o f S to c k a n d Bo o k - d e b ts v a lu e d a t ₹ 1 3 . 9 6 la k h s a s p e r A BS a s a t 3 1 . 0 3 . 20 0 9 (v a r ia b le ). (2 ) H y p o th e c a tio n o f P la n t a n d M a c h in e r y to b e a c q u ir e d a n d n e w ma c h in e r i e s to b e p u r c h a s e d o u t o f p r o p o s e d te r m l o a n . V a lu e d a t ₹ 1 4 3 .2 8 la k h s ( ₹ 5 9 la k h s (e x is t in g ) + ₹ 8 4 . 28 L a k h s (Ne w ) a s p e r v a lu e a s s u me d in M O U. (3 ) EM T o f la n d a n d f a c to r y b u ild in g s it u a te d a t G u t No . 3 2 9 , a t K a le wa d i No . 1 , P a la s d e v , T a l. I n d a p u r , D is t. P u n e EM T o f S h o p No . 7 , S a i V ih a r , S e c to r - 1 5 , P lo t No . 7 8 , 7 9 CBD B e la p u r Na v i M u mb a i a d me a s u r in g 9 1 5 s q . f e e t p r o s p e c t iv e o wn e r M / s . A v a d h o o t T r a d e r s (P r e s e n t o wn e r M / s . J H B Co n s tr u c t io n Co . P v t. L td ) ₹ 8 6 . 9 2 L a k h s p e r V a lu a t io n r e p o r t d a te d 2 5 . 0 2 . 20 1 0 . P e r s o n a l G u a r a n te e d b y th e f o l lo w in g : - (1 ) S h r i. K a p il D . R a jp u t; (2 ) S h r i. M i th i le s h D . R a jp u t ; (3 ) S h r i. M u r u g e s a n A d imo o la n ;

S h r i H e ma l J o b a n p u tr a .

a d me a s u r in g 5 5 0 0 s q . mtr s la n d wi th b u ild in g v a lu e d a t ₹ 7 2 la k h s (L a n d ₹ 2 7 . 50 la k h s + e x is t in g b u ild in g ₹ 4 4 . 50 la k h s ) a s p e r v a lu a t io n r e p o r t d a te d 2 7 . 0 1 . 20 1 0 o f P . K . G h o s h a t p r e s e n t F a c to r y is o wn e d b y M / s . B & B D a ir y a n d A g r i F o o d s ) .

T ota l A m ou n t - ₹ 4 ,1 1 ,0 0 , 0 0 0 / - - - -

1 7 . 0 9 . 20 1 1 O CC / O D B D ₹ 2 5 0 ,0 0 , 0 0 0 / - R O I @ 1 4 . 7 5% p e r a n n u m f lo a t in g (H O C ir 2 2 5 / 20 1 1 ) H y p o th e c a tio n o f S to c k a n d Bo o k - d e b ts , Bo o k - d e b ts v a lu e d a t ₹ 4 3 2 .7 8 L a k h s a s p e r S to c k S ta te m e n t f o r th e mo n th o f J u n e 2 0 1 1 . EM T o f S h o p No . 7 , S a i V ih a r , S e c to r - 1 5 , P lo t No . 7 8 , 7 9 a n d 80 CBD Be la p u r Na v i M u mb a i a d me a s u r in g 9 1 5 s q . f e e t p r o s p e c t iv e o wn e r M / s . A v a d h o o t T r a d e r s v a lu e d a t ₹ 8 6 . 9 2 L a k h s p e r V a lu a t io n r e p o r t d a te d 2 5 . 0 2 . 20 1 0 . P e r s o n a l G u a r a n te e d b y th e f o l lo w in g : - (1 ) S h r i. K a p il D . R a jp u t; (2 ) S h r i. M i th i le s h D . R a jp u t ; (3 ) S h r i. M u r u g e s a n A d imo o la n ; (4 ) S h r i H e ma l J o b a n p u tr a .

T e r m L o a n L ia b il i ty o f ₹ 8 5 . 8 7 L a k h s to c o n tin u e ti l l c le a r a n c e . (T e r m L o a n is n o t f u l ly d is b u r s e d , o n ly ₹ 1 0 1 .6 2 L a k h s h a v e b e e n d is b u r s e d . Ba la n c e

H y p o th e c a ti o n o f e x is tin g P la n t a n d M a c h in e r y v a lu e d a t ₹ 5 9 la k h s

EM T o f L a n d & F a c to r y Bu i ld in g s it u a te d a t G u t No . 3 2 9 a t K a le wa d i No . 1 , P a la s d e v , T a l. I n d a p u r D is t. P u n e

T e r m L o a n ₹ 5 9 . 38 L a k h s to b e c a n c e lle d . a d me a s u r in g 5 5 0 s q . me t e r la n d wi th Bu i ld in g v a lu e d a t ₹ 7 2 la k h s (L a n d ₹ 2 7 . 50 la k h s a n d Ex is tin g Bu i ld in g ₹ 4 4 . 50 L a k h s ) a s p e r v a lu a t io n r e p o r t d a te d 2 7 . 0 1 . 20 1 0 .

T ota l A m ou n t - ₹ 3 ,3 5 ,8 7 , 0 0 0 / - - - -

0 4 . 0 1 . 20 1 2 O CC / O D B D ₹ 2 5 0 ,0 0 , 0 0 0 / - @ 1 4 . 7 5% p e r a n n u m f lo a t in g (H O C ir 2 2 5 / 20 1 1 ) (Ba s e r a te + 4% = 1 0 . 75 + 4% ) H y p o th e c a tio n o f S to c k a n d Bo o k - d e b ts , Bo o k - d e b ts v a lu e d a t ₹ 4 6 5 .3 1 L a k h s a s p e r S to c k S ta te m e n t f o r th e mo n th o f S e p te mb e r 2 0 1 1 . EM T o f S h o p No . 7 , S a i V ih a r , S e c to r - 1 5 , P lo t No . 7 8 , 7 9 a n d 80 CBD Be la p u r Na v i M u mb a i a d me a s u r in g 9 1 5 s q . f e e t p r o s p e c t iv e o wn e r M / s . A v a d h o o t T r a d e r s v a lu e d a t ₹ 8 6 . 9 2 L a k h s p e r V a lu a t io n r e p o r t d a te d 2 5 . 0 2 . 20 1 0 . P e r s o n a l G u a r a n te e d b y th e f o l lo w in g : - (5 ) S h r i. K a p il D . R a jp u t; (6 ) S h r i. M i th i le s h D . R a jp u t ; (7 ) S h r i. M u r u g e s a n A d imo o la n ; S h r i H e ma l J o b a n p u tr a .

T e r m L o a n ₹ 8 0 , 62 , 0 0 0 / -

H y p o t h e c a tio n o f e x is tin g P la n t a n d M a c h in e r y v a lu e d a t ₹ 5 9 la k h s ;

EM T o f L a n d & F a c to r y Bu i ld in g s it u a te d a t G u t No . 3 2 9 a t K a le wa d i No . 1 , P a la s d e v , T a l. I n d ap u r D is t. P u n e a d me a s u r in g 5 5 0 s q . me te r la n d wi th Bu i ld in g v a lu e d a t ₹ 7 2 la k h s (L a n d ₹ 2 7 . 50 la k h s a n d Ex i s t in g Bu i ld in g ₹ 4 4 . 50 L a kh s ) a s p e r v a lu a t io n r e p o r t d a t e d 2 7 . 0 1 . 20 1 0 .

T ota l A m ou n t - ₹ 3 ,3 0 ,6 2 , 0 0 0 / - - - -

0 5 . 0 1 . 20 1 2 A d h o c O CC l i mi t ₹ 7 5 , 00 , 0 0 0 / - @2% ab o v e p e r mi t te d A ll t e r m s a n d c o n d it io n s a s A ll te r ms a n d c o n d it io n s a s p e r

R O I f o r r e g u la r W C li m it. p e r o u r R e n e wa l S a n c tio n M e mo r a n d u m - A v a d h o o t/ K CL / 2 0 1 2 da te d 0 4 . 0 1 . 20 1 2 wil l b e a p p lic a b le . o u r R e n e wa l S a n c tio n M e mo r a n d u m - A v a d h o o t/ K CL / 2 0 1 2 d a te d 0 4 . 0 1 .2 0 12 wi l l b e a p p lic a b le .

T ota l A m ou n t - ₹ 7 5 ,0 0 ,0 0 0 / - - - -

On the dates given below, defendants signed and executed the loan and security documents as set out in paragraph nos. 5(iv) to (xvii) of the Transferred Original Application. Defendants hypothecated Stock and Book-debts and Plant and Machinery and mortgaged EMT of land and factory building situated at Gut No.329, at Kalewadi No.1, Palasdev, Tal. Indapur, Dist. Pune admeasuring 5500 sq. mtrs land with building valued at ₹72 lakhs (Land ₹27.50 lakhs + existing building ₹44.50 lakhs) as per valuation report dated 27.01.2010 of P.K. Ghosh at present Factory is owned by M/s. B & B Dairy and Agri Foods) and EMT of Shop No.7, Sai Vihar, Sector-15, Plot No.78, 79 CBD Belapur Navi Mumbai admeasuring 915 sq. feet prospective owner M/s. Avadhoot Traders valued at ₹86.92 Lakhs per Valuation report dated 25.02.2010 to secure the loan. The details of the documents executed by the Defendant are as under: - (a) Accepted Sanction Letter dated 16.04.2010; (b) Request for Overdraft facilities dated

17.04.2010;

(c) Pro-note dated 17.04.2010;

(d) Letter of Undertaking re: Loans/Advances dated 17.04.2010; (e) Partnership Letter dated 17.04.2010;

(f) Subordination Agreement dated 17.04.2010; (g) Annexure III (re: Submitting to Arbitration) dated 17.04.2010;

(h) Common Hypothecation Agreement dated 17.04.2010;

(i) Particulars of Vehicles/Machinery/Equipment/Livestock etc. hypothecation dated 17.04.2010;

(j) Guarantee Agreement alongwith Guarantee covering letter executed by the Defendant No.2 dated 17.04.2010; (k) Guarantee Agreement alongwith Guarantee covering letter executed by the Defendant No.3 dated 17.04.2010;

(l) Guarantee Agreement alongwith Guarantee covering letter executed by the Defendant No.4 dated 17.04.2010; (m) Guarantee Agreement alongwith Guarantee covering letter executed by the Defendant No.5 dated 17.04.2010; (n) Letters of Evidencing Deposit of Title deeds dated 17.04.2010; (o) Letters of Evidencing Deposit of Title deeds dated 31.05.2010;

(p) Deed of Hypothecation re: Machinery dated 05.05.2010; (q) Term Loan Agreement dated 31.05.2010;

(r) Link Letter dated 31.05.2010;

(s) Accepted Sanction Letter dated 17.09.2011; (t) Letter of Renewal dated 03.10.2011;

(u) Partnership Letter dated 03.10.2011;

(v) Guarantee Agreement alongwith Guarantee covering letter executed by the Defendant No.2 dated 03.10.2011; (w) Guarantee Agreement alongwith Guarantee covering letter executed by the Defendant No.3 dated 03.10.2011;

(x) Guarantee Agreement alongwith Guarantee covering letter executed by the Defendant No.4 dated 03.10.2011; (y) Guarantee Agreement alongwith Guarantee covering letter executed by the Defendant No.5 dated 03.10.2011; (z) Accepted Sanction Letter dated 04.01.2012; (aa) Letter of Renewal dated 05.01.2012; (bb) Letters from the Guarantor whenever limits are to be renewed executed by the Defendant no.2 dated 05.01.2012;

(cc) Letters from the Guarantor whenever limits are to be renewed executed by the Defendant no.3 dated 05.01.2012;

(dd) Letters from the Guarantor whenever limits are to be renewed executed by the Defendant no.4 dated 05.01.2012; (ee) Letters from the Guarantor whenever limits are to be renewed executed by the Defendant no.5 dated 05.01.2012; (ff) Acknowledgement of Debt and Security dated 10.07.2012; (gg) Request for Overdraft facilities dated 05.01.2012; (hh) Pro-note dated 05.01.2012;

(ii) Supplementary Common Hypothecation Agreement dated 05.01.2012;

(jj) Letter of Authority for exaction of documents dated 04.01.2012; (kk) Undertaking dated 05.01.2012;

(ll) Guarantee Agreement each of ₹75,00,000/- alongwith Guarantee covering letters, executed by the Defendant No.2 dated 05.01.2012;

(mm) Guarantee Agreement each of ₹75,00,000/- alongwith Guarantee covering letters, executed by the Defendant No.3 dated 05.01.2012; (nn) Guarantee Agreement each of ₹75,00,000/- alongwith Guarantee covering letters, executed by the Defendant No.4 dated 05.01.2012; (oo) Guarantee Agreement each of ₹75,00,000/- alongwith Guarantee covering letters, executed by the Defendant No.5 dated 05.01.2012;

(pp) Led-td to be used where additional limit granted on the very securities already mortgaged.

After availing the loan, defendants did not adhere to the financial discipline and committed default in payment of instalments and repayment of the loan and accordingly the accounts of the borrowers were declared as Non-Performing Assets (N.P.A.) on 14.06.2012 as per RBI Guidelines. Therefore, on 12.04.2014, the applicant, through its advocate, called upon defendants to liquidate the outstanding in the sum of ₹5,42,05,869.00/- (Rupees Five Crores Forty-Two Lakhs Five Thousand Eight Hundred Sixty-Nine Only) as on 31.03.2014 with further interest from 01.04.2014 till payment and/or realization within 7 days from receipt of the said notice. Despite notice, defendant nos.1 to 5 failed and neglected to pay.

As on 20.04.2014, there was owing, due and payable by defendants to the applicant the aggregate sum of ₹5,47,88,640.00/- (Rupees Five Crores Forty-Seven Lakhs Eighty-Eight Thousand Six Hundred Forty Only) wherein ₹4,55,44,626.00/- (Rupees Four Crores Fifty-Five Lakhs Forty-Four Thousand Six Hundred Twenty- Six Only) with future interest @ 17.95% per annum plus penal interest @ 2% per annum under OCC Facility and ₹92,44,014.00/- (Rupees Ninety- Two Lakhs Forty-Four Thousand Fourteen Only) with future interest @ 16% per annum plus penal interest @ 2% per annum under Term Loan Facility with monthly rest thereon. The applicant has maintained the loan ledger extract and the entries posted therein are made in the usual and ordinary course of the banking business.

Since, defendants failed and neglected to make the payment, the applicant was left with no other alternate but to file the Transferred Original Application which was presented on 21.04.2014.

The applicant has filed affidavit (exhibit-11) in lieu of examination in chief of Mr Nilam, Manager of the Applicant Bank and list of documents (exhibit-12) thereby adducing in evidence the documents at AW-1 to AW-51, which are admitted in evidence, read, recorded and exhibited.

Accordingly, in the Transferred Original Application was filed for the recovery of aggregate amount of ₹5,47,88,640.00/- (Rupees Five Crores Forty-Seven Lakhs Eighty-Eight Thousand Six Hundred Forty Only) wherein ₹4,55,44,626.00/- (Rupees Four Crores Fifty-Five Lakhs Forty-Four Thousand Six Hundred Twenty- Six Only) with future interest @ 17.95% per annum plus penal interest @ 2% per annum under

OCC Facility and ₹92,44,014.00/- (Rupees Ninety- Two Lakhs Forty-Four Thousand Fourteen Only) with future interest @ 16% per annum plus penal interest @ 2% per annum under Term Loan Facility with monthly rest thereon from the date of presentation of the Transferred Original Application i.e. 21.04.2014 till payment/realisation.

The Tribunal has scrutinised and examined the allegations contained in the Transferred Original Application and analysed the evidence adduced by the applicant which has gone unchallenged, uncontroverted and unrebutted.

Upon careful scrutiny and the examination of the Transferred Original Application, analysing the evidence and giving due weightage to the documentary evidence adduced by the applicant, the Tribunal views that there is no reason to disbelieve the claim made by the applicant bank.

In view of the observations made hereinabove, Transferred Original Application filed by the applicant deserves to be allowed.

Hence, the following order:

ORDER

(A) The Transferred Original Application No.1791 of 2016 in Original Application No.127 of 2015 is allowed with costs. (B) Defendant no.1, a Partnership Firm through its

Partners and Guarantors i.e. Defendant nos.2 to 5 are ordered and directed to pay to the applicant, either jointly or severally, the aggregate sum of ₹5,47,88,640.00/- (Rupees Five Crores Forty- Seven Lakhs Eighty-Eight Thousand Six Hundred Forty Only) wherein ₹4,55,44,626.00/- (Rupees Four Crores Fifty-Five Lakhs Forty-Four Thousand Six Hundred Twenty-Six Only) with future simple interest @ 12% per annum under OCC Facility and ₹92,44,014.00/- (Rupees Ninety- Two Lakhs Forty-Four Thousand Fourteen Only) with future simple interest @ 12% per annum under Term Loan Facility thereon from the date of presentation of the Transferred Original Application i.e. 21.04.2014 till payment/realization. (C) The aforesaid adjudicated amount is secured by the valid and subsisting hypothecated properties, that is, Stock and Book-debts and Plant and Machinery. (D) The aforesaid adjudicated amount is secured by the valid and subsisting mortgaged immovable property, that is, EMT of land and factory building situated at Gut No.329, at Kalewadi No.1, Palasdev, Tal. Indapur, Dist. Pune admeasuring 5500 sq. mtrs land with building valued at ₹72 lakhs (Land ₹27.50 lakhs + existing building ₹44.50 lakhs) as per valuation report dated 27.01.2010 of P.K. Ghosh at present Factory is owned by M/s. B & B Dairy and Agri Foods) and EMT of Shop No.7, Sai Vihar, Sector-15, Plot No.78, 79 CBD Belapur Navi Mumbai admeasuring 915 sq. feet prospective owner M/s. Avadhoot Traders valued at ₹86.92 Lakhs per Valuation report dated 25.02.2010. (E) Defendant no.1, a Partnership Firm through its Partners and Guarantors i.e. Defendant nos.2 to 5 are entitled to redeem the hypothecated and mortgaged properties as per law failing which the applicant has right to proceed to sell the hypothecated and mortgaged properties and recover dues as per law. (F) Issue Recovery Certificate. (G) The learned Registrar is directed to send a copy of the judgment and recovery certificate to (i) the applicant, (ii) defendant and (iii) the Recovery Officer by post and email.

(Harish Kumar Kaushik) Presiding Officer, DRT-2, Mumbai