CANARA BANK vs MS ANNEX on 11 August 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 1993 Act’) to recover ₹1,19,32,650/- (Rupees One Crore Nineteen Lakhs Thirty-Two Thousand Six Hundred Fifty Only) wherein a sum of ₹1,07,91,565/- (Rupees One Crore Seven Lakhs Ninety-One Thousand Five Hundred Sixty-Five Only) under Book-debts alongwith interest of ₹10,00,273/- (Rupees Ten Lakhs Two Hundred Seventy-Three Only) @ different rates of interest and last applied rate of interest i.e. 15.5% per annum compounded at monthly rests alongwith

Overdue interest of ₹1,40,812/- (Rupees One Lakhs Forty Thousand Eight Hundred Twelve Only) @ 2% penal interest per annum towards outstanding

Packing Credit Accounts i.e. towards (PC/FDB/FBE) and further interest thereon from the date of presentation of the Transferred Original Application i.e. 24.06.2010 till payment/realization and to enforce the hypothecated securities.

The details of the claim amount are as under: - S r N o N a t ur e of F a c i li t y O/s . i nc l us i ve of U na ppli e d i nt e r e s t A t di ffe r e nt r a t e of i nt e r e s t L a s t a ppli e d r a t e of i nt e r e s t i .e . 15 .5 % pe r a n n um c om po u nde d a t m o nt h ly r e s t s a lo ng w i t h Ove r due i nt e r e s t Tot a l A m ou nt

FDB /P C /FB E ₹ 1 , 0 7 , 9 1 ,5 6 5 / - ₹ 1 0 , 0 0 , 27 3 / - ₹ 1 , 4 0 , 8 12 /- ₹ 1,19 ,3 2 ,6 5 0 / -

It is undisputed fact in the matter that the Defendant nos.1 to 3 were duly served with the summons vide order-sheet dated 22.04.2022. Despite service, the defendants did not enter their appearance and therefore, they were set ex-parte on 26.07.2022.

Defendant no.1, a partnership firm acting through its partners and guarantors are the principal borrowers who approached the Applicant Bank and sought financial assistance by way of

FDB/PC/FBE Facility. Pursuant to the loan application made by defendants, the Applicant sanctioned the loan vide Sanction Letter dated 05.12.2005 in sum of ₹30,00,000/- (Rupees Thirty Lakhs Only) under FDB Facility with interest at the rate of 7.50% per annum. Further on 11.11.2008, the Applicant bank issued a sum of ₹1,25,00,000/- (Rupees One Crore Twenty-Five Lakhs Only) under PC/FDB/FBE Facility with interest as applicable to export finance and a sum of ₹10,00,000/- (Rupees Ten Lakhs Only) under Term Loan. Lastly, the said loan was renewed on 15.12.2008 (Rewenal) for an aggregate sum of ₹75,00,000/- (Rupees Seventy-Five Lakhs Only) and the further details of the same is given in the table below.

The details of the Sanction amount are as under: - S r N o Date o f S anctio n Natu re o f F acilities Amo u nt RO I S ecu rity

0 5 .12 .20 05 FD B ₹3 0 ,0 0 ,0 0 0 /- 7 .5 0% pe r an num Hy po thecatio n of Mach i nery. P erso nal Gu arantee of b oth th e p artn ers i .e. S hri Bi mal M G an dh i an d S mt T ej al B G and hi .

T o tal Amo u nt - ₹3 0 ,00 ,00 0 /- - -

1 1 .11 .20 08 P C/FD B/F B E ₹1 ,25 ,00 ,00 0 / - As ap pl i cab le to e xp ort fi nan ce Hy po thecatio n of S tock s an d Book -d eb ts

T er m Loan ₹1 0 ,0 0 ,0 0 0 /- - Hy po thecatio n of P l an t an d Mach i nery.

Co llateral i n Both th e faci li tie s are as fol l ows: - ( i) RD 5 6 4 of ₹2 5 ,0 0 0 /-; ( ii ) RD 5 9 1 of ₹3 1 30 5 4 /-; ( ii i) RD 6 4 4 of ₹2 5 ,0 0 0 /-; ( iv ) KD 1 3 96 1

of ₹3 4 ,7 2 4 /-; ( v) KD of ₹1 1 00 1 2 of ₹5 3 ,9 2 3 /-; ( vi ) 8 LI C p ol i ci e s. P erso nal Gu arantee of b oth th e p artn ers i .e. S hri Bi mal M G an dh i an d S mt T ej al B G and hi .

T o tal Amo u nt - ₹1 ,3 5 ,0 0 ,000 /- - -

1 5 .12 .20 08 ( Rene wal) P C/FD B/F B E ₹6 5 ,0 0 ,0 0 0 /- 1 0 .75% Hy po thecatio n of S tock s, LIP S , KD RS an d

Mach i nery.

LH M ₹1 0 ,0 0 ,0 0 0 /- 1 5 .25% Hy po thecatio n of S tock s, LIP S , KD RS an d Mach i nery.

T o tal Amo u nt - ₹7 5 ,00 ,00 0 /- - -

On the dates given below, defendants signed and executed the loan and security documents as set out in paragraph nos. (vi) (iii) to (xvi) of the Original Application. Defendants hypothecated of Stocks and Book-debts and Plant & Machinery i.e. Juki Kaz Button model no.771 purchased by M/s. Deepa Enterprises, Juki Nutton Set Model No.372 purchased by M/s. Deepa Enterprises, O/L 5 Thread Machine, Sliter Boiler with iron, S/N Lock Stich and 8” cutting purchased by M/s. Mahavir Impex, 5 Thread Lock Stoch Machine Model No.FB/N/310/5020/35S3F, Single Needle Loc Stich Machine SW-C-11-3A and Portable Boiler with Iron covemat-GE-50 purchased by M/s. Apparel & Leather Tech, Fabrics, readymade garments and collateral securities of RD 564 of ₹25,000/-; RD 591 of ₹313054/-; RD 644 of ₹25,000/-; KD 139612 of ₹34,724/-; KD of ₹110012 of ₹53,923/- and 8 LIC policies to secure the loan.

The details of the documents executed by the Defendants are as under: - (a) Sanction Letter dated 05.12.2005;

(b) Partnership Letter dated 06.12.2005;

(c) Counter Indemnity Letter for Negotiation/Purchase/Discount of Bills dated 06.12.2005; (d) Authority Letter dated 06.12.2005;

(e) Letter of Undertaking dated 06.12.2005;

(f) Agreement creating collateral security dated 06.12.2005; (g) Guarantee covering letter by defendant no.2 dated 06.12.2005;

(h) Guarantee Agreement executed by Defendant no.2 dated 06.12.2005;

(i) Guarantee covering letter by defendant no.3 dated 06.12.2005;

(j) Guarantee Agreement executed by Defendant no.3 dated 06.12.2005; (k) Power of Attorney dated 06.12.2005;

(l) Deed of Hypothecation re: Machinery dated 25.04.2006; (m) Agreement re: Collateral security: Machinery Vehicles dated 25.04.2006; (n) Guarantee covering letter by defendant no.2 dated 25.04.2006;

(o) Guarantee Agreement executed by Defendant no.2 dated 25.04.2006;

(p) Guarantee covering letter by defendant no.3 dated 25.04.2006;

(q) Guarantee Agreement executed by Defendant no.3 dated 25.04.2006; (r) Partnership Letter dated 20.04.2006;

(s) Application dated 25.09.2006;

(t) Pronote dated 07.10.2006;

(u) Hypothecation Agreement for Packing Credit Advances dated 07.10.2006;

(v) Guarantee covering letter by Defendant no.2 dated 07.10.2006;

(w) Guarantee Agreement executed by Defendant no.2 dated 07.10.2006;

(x) Guarantee covering letter by defendant no.3 dated 07.10.2006;

(y) Guarantee Agreement executed by Defendant no.3 dated 07.10.2006; (z) Pronote dated 15.12.2008;

(aa) Letter of Renewal dated 15.12.2008; (bb) Power of Attorney in respect of Export Bills, purchased negotiated dated 15.12.2008;

(cc) Letter for Loans/Advances against LIC Policy/NSE/Post Office Time Deposits/Govt. Securities/National Deposit Receipts/KVP/Bonds dated 15.12.2008;

(dd) Letter for Loans/Advances against Term Deposits dated 15.12.2008;

(ee) Agreement re: Collateral security: Machinery,

Vehicles dated 15.12.2008;

(ff) Counter Indemnity Letter for Negotiating/Purchase/Discount of Bills dated 15.12.2008; (gg) Guarantee covering letter by Defendant no.2 dated 15.12.2008;

(hh) Guarantee Agreement executed by Defendant no.2 dated 15.12.2008;

(ii) Guarantee covering letter by defendant no.3 dated 15.12.2008;

(jj) Guarantee Agreement executed by Defendant no.3 dated 15.12.2008; (kk) Link Letter in respect of Enhancement of Credit Facilities dated 15.12.2008;

(ll) Supplemental Agreement dated 15.12.2008; (mm) Letter of Undertakings dated 29.01.2009; (nn) Sanction Letter dated 11.11.2008; (oo) Letter of Extending/Enhancing Credit Limits dated 20.12.2008; (pp) Pronote dated 20.12.2008; (qq) Hypothecation Agreement from Packing Credit Advances dated 20.12.2008; (rr) Guarantee covering letter by Defendant no.2 dated 20.12.2008;

(ss) Guarantee Agreement executed by Defendant no.2 dated 20.12.2008; (tt) Guarantee covering letter by defendant no.3 dated 20.12.2008;

(uu) Guarantee Agreement executed by Defendant no.3 dated 20.12.2008;

(vv) Acknowledgement of Debt and Security dated 15.12.2008.

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 Irregular as per RBI Guidelines. Therefore, on 09.02.2010, the applicant, through its advocate, called upon defendants to liquidate the outstanding in the sum of ₹1,17,13,665/- (Rupees One Crore Seventeen Lakhs Thirteen Thousand Six Hundred Sixty-Five Only) alongwith further applicable interest thereon within 7 days from receipt of this notice. Despite notice, defendant nos.1 to 3 failed and neglected to pay.

As on 24.06.2010, there was owing, due and payable by defendants to the applicant the aggregate sum of ₹1,19,32,650/- (Rupees One Crore Nineteen Lakhs Thirty-Two Thousand Six Hundred Fifty Only) wherein a sum of ₹1,07,91,565/- (Rupees One Crore Seven Lakhs Ninety-One Thousand Five Hundred Sixty-Five Only) under Book-debts alongwith interest of ₹10,00,273/- (Rupees Ten Lakhs Two Hundred

Seventy-Three Only) @ different rates of interest and last applied rate of interest i.e. 15.5% per annum compounded at monthly rests alongwith Overdue interest of ₹1,40,812/- (Rupees One Lakhs Forty Thousand Eight Hundred Twelve Only) @ 2% penal interest per annum towards outstanding

Packing Credit Accounts i.e. towards (PC/FDB/FBE) and further interest 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 24.06.2010.

The applicant has filed affidavit (exhibit-19) in lieu of examination in chief of Mr Hari Om, Manager and the Constituted Attorney of Applicants and list of documents (exhibit-20) thereby adducing in evidence the documents at AW-1 to AW-53, which are admitted in evidence, read, recorded and exhibited.

Accordingly, in the Transferred Original Application was filed for the recovery of ₹1,19,32,650/- (Rupees One Crore Nineteen Lakhs Thirty-Two Thousand Six Hundred Fifty Only) wherein a sum of ₹1,07,91,565/- (Rupees

One Crore Seven Lakhs Ninety-One Thousand Five Hundred Sixty-Five Only) under Book-debts alongwith interest of ₹10,00,273/- (Rupees Ten Lakhs Two Hundred Seventy-Three Only) @ different rates of interest and last applied rate of interest i.e. 15.5% per annum compounded at monthly rests alongwith Overdue interest of ₹1,40,812/- (Rupees One Lakhs Forty Thousand Eight Hundred Twelve Only) @ 2% penal interest per annum towards outstanding 46 Packing Credit Accounts i.e. towards (PC/FDB/FBE) and further interest thereon from the date of presentation of the Transferred Original Application i.e. 24.06.2010 till payment/realisation.

The Tribunal has scrutinised and examined the averments 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.1383 of 2016 in Original Application No.265 of 2010 is allowed with costs. (B) Defendant nos.1 to 3 are ordered and directed to pay to the applicant, either jointly or severally, the aggregate sum of ₹1,19,32,650/- (Rupees One Crore Nineteen Lakhs Thirty-Two Thousand Six Hundred Fifty Only) towards (PC/FDB/FBE) with further simple interest @ 12% per annum thereon from the date of presentation of the Transferred Original Application i.e. 24.06.2010 till payment/realization after adjusting the recoveries made by the Applicant under SARFAESI Act, 2002 or any other amount paid by the borrowers after filing of this T.O.A. No.1383 of 2016. (C) The aforesaid adjudicated amount is secured by the valid and subsisting hypothecated properties, that is, Stocks and Book-debts and Plant & Machinery i.e. Juki Kaz Button model no.771 purchased by M/s. Deepa Enterprises, Juki Nutton Set Model No.372 purchased by M/s. Deepa Enterprises, O/L 5 Thread Machine, Sliter Boiler with iron, S/N Lock Stich and 8” cutting purchased by M/s. Mahavir Impex, 5 Thread Lock Stoch Machine Model No.FB/N/310/5020/35S3F, Single Needle Loc Stich Machine SW-C-11-3A and

Portable Boiler with Iron covemat-GE-50 purchased by M/s. Apparel & Leather Tech, Fabrics, readymade garments and collateral securities of RD 564 of ₹25,000/-; RD 591 of ₹313054/-; RD 644 of ₹25,000/-; KD 139612 of ₹34,724/-; KD of ₹110012 of ₹53,923/- and 8 LIC policies. (D) Defendant nos.1 to 3 are entitled to redeem the hypothecated properties as per law failing which the applicant has right to proceed to sell the hypothecated properties and recover dues as per law. (E) Issue Recovery Certificate. (F) 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