CANARA BANK vs MS K M MILK AND MILK PRODUCTS on 4 September 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 ₹11,19,71,294.00/- (Rupees Eleven Crore Nineteen Lakhs Seventy-One Thousand Two Hundred Ninety-Four Only) under OCC/ODBD Loan, ADHOC Credit A/c and Term Loan Facilities with future interest @ 17.95% per annum plus 2% penal interest with monthly rest thereon from the date of presentation of the Transferred Original Application i.e. 22.04.2014 till payment/realization and to enforce the hypothecated and mortgaged securities.

The details of the claim amount are as under:- S r N o Na tu re o f F a c i li ty O / s . A m ou n t Un c h a rg e d i n te re s t fr om 0 1 .0 4 .2 0 1 4 to 2 1 .0 4 .2 0 1 4 P e n a l I n te re s t @2 % p .a . T ota l A m ou n t

O CC / O D BD L o a n a n d A D H O C Cr e d i t A / c . ₹ 1 1 , 07 , 0 0 , 66 2 / - ₹ 1 1 , 43 , 2 5 0 / - ₹ 1 , 2 7 , 38 2 / - ₹ 1 1 ,1 9 ,7 1 ,2 9 4 / -

T ota l A m ou n t - - - ₹ 1 1 ,1 9 ,7 1 ,2 9 4 / -

It is undisputed fact in the matter that the Defendant nos.1 to 6 were duly served with the summons vide order-sheet dated 04.01.2016. The present matter was transferred from DRT-III to DRT-II and a transfer notice was issued and the same was served to all the defendants vide order sheet dated 27.03.2019. Despite service, the defendants did not enter their appearance and therefore, they were set ex-parte on 03.09.2026.

Defendant no.1, a private limited company, is the principal borrower who approached the Applicant Bank and sought financial assistance by way of OCC/ODBD Loan and ADHOC Credit Facilities wherein Defendant nos.2 to 5 are the Directors of the said company and Defendant no.6 is the corporate guarantor of the said loan. Pursuant to the loan application made by defendants, the Applicant sanctioned the loan vide Sanction Letter bearing Ref. No. CBCM/ADV/CR-2009 dated 04.11.2009 in the Open Cash Credit (OCC) facility in sum of ₹86,25,00,000/- (Rupees Eighty-Six Crores Twenty-Five Lakhs Only) with interest at the rate of 13.25 % per annum floating interest and Term Loan of ₹3,39,00,000/- (Rupees Three Crores Thirty-Nine Lakhs Only payable in 72 monthly installments with interest at the rate of 13.50% per annum floating interest. The 1st instalment of ₹4,70,850/- and last instalment of ₹4,69,650/-. Further time to time the said loan was renewed from time to time and the details of the same is given in the table below.

The details of the Sanctioned amounts are as under: - Sr No D ate of Sanct ion Name of L imi t Amoun t sanct ioned R ate o f I nteres t Secu ri ti es

04.11 .20 09 OC C /O DB D ₹ 6,25, 00, 0 00/- Graded R OI 13.25 % [floating] [subject t o change s a s adv ised by bank /R BI fro m tim e t o time]. Hypot hec ated entire stoc k i ncluding st ock w ith proc ess ors /go ods in transi t sh ould be fully in sured Bank clause a nd origin al policy to be l odged w ith the Ba nk. Term L oan ₹ 3,39, 00, 0 00/- Graded Rat e of I nter est o f 13.50 %p .a. F loating

Pr ima ry: (i ) Hyp otheca ti on of Stoc k & Bo ok - de bts v alued at ₹ 549 .15 Lakh s as p er AB S as at 31 .03 .20 09; (i i) Hypot hec atio n of Plant & Ma chin ery to be acquir ed a nd new machi nerie s fr om propo sed T erm loa n, v alued at ₹ 370 .42 lakhs [ ₹ 105 .53 lakhs[e xisti ng] As per v aluati on rep ort dated 08 .10 .200 9+ ₹ 264.89 Lakh s [ New ] ; (i ii ) EMT o f L and and Facto ry b u ild ing si tua ted at A -8 4, MIDC Area Khamga on , Dis t. Buldha na, Maharash tra, admea suring 3 A cres [12140 .47 sq. mtrs] land and buildi ng, Plant and Machineri es , Built up Area RC C 704 .79 sq. mtrs . v alued at ₹ 122.02 lakh s [L and ₹ 27.00 lakhs + Exi sting

Building ₹ 78 .70 lakhs] as per v aluation rep ort dated 08 .10 .200 9 of P.K. Gh osh .Pr opo sed building to be con struct ed v alued at ₹ 22 .01 lakh s. COL L A TER AL : -

(i) EMT of Com merc ial Shop No 15 , Gr ound F loor, Sai Vi har, Near Relia nce F re sh Market, Sec tor No 15, C. B .D . B ELA PU R, Nav i Mumbai admea suring 590 sq. feet [ Built up] ow ned by Shri Mithil esh D. Rajput v alued at ₹ 73.53 lak hs as per v aluation rep ort dated 01- 10- 2 009 of P.K. G ho sh ;

(ii) EMT o f Mudra Res ort at Mu mbai G on Highw ay Panc hayat Shepa ns , Nagao than e, Tal - Roha Di st- Raigad (Resort w ith furnis hed gu est roo ms, a dm easuring 19125 sq . ft. ow ned by M /s. Dw araka Mills & Milk Produ cts Pv t Lt d v alued at ₹ 464.62 lakh s as p er v aluation rep ort dated 01 /10 /20 09 of P.K. G ho sh .

PER SO NAL G UAR A NTE E: -

(i) Shri.Ka pil D.Rajpu t;

(ii) Shri. Mithilesh D.Rajpu t;

(iii) Shri Murugesan Adimo ola n ; (iv ) Shri. Hem al Joba nputra

COR POR A TE G UAR A NTE E: -

M/s, Dw arka Milk & Milk Pro ducts Pv t. L td.

Tota l Amoun t - ₹ 89,64 ,00, 000 / - - -

25.06 .20 10

Adhoc OD BD limit ₹ 1.00 cror e for a period o f 60 day s.

ROI @ 2% abov e t he ROI applicable t o regular OC C /O DB D limit i.e.1 5.2 5%

- pa (F loati ng) .

Tota l Amoun t - ₹ 1.00 cror e - -

31.03 .20 11

OC C /O DB D

₹ 625.00 lakhs

Permit ted ROI @ 13.50 % p.a . floati ng a s per H O Cir 29/1 1 linke d to CRR Pr ima ry - F or Wor king Ca pital:

(i) Hyp otheca ti on of Stoc k and Bo ok Debt s v alued at ₹ 1156.2 8 lakh s (only BD v alue) a s per stoc k & BD state me nt for F eb.20 11. F or Ter m L oan :

(i) Hyp otheca ti on of Plant & Ma chin eries Dist. Buld hana admea suring 3 A cres land a nd building built up ar ea 704 .79 sq.;

(ii) EMT o f land and Facto ry B u ild ing si tua ted at A -8 4. MIDC Ar ea, Khamga on mt s. Valued a t ₹ 122 .02 lakhs a s per Valuatio n rep ort dated 8- 10- 2 009 Since t erm l oan is not av ailed a nd at prese nt sta nds cancell ed, he nce prime security to TL is n ot creat ed.

Colla ter al -

(i) EMT of Com merc ial Shop 1 5, Sai Vihar 15, Plot No .78 ,79 .80 CB D Belapur Nav i Mumbai, admea suring 774 Sq F t. super built- up area Ow ned by Shri Mithilesh D .Rajput (Leas e hold la nd fr om CID C O for 6 0 years fro m 0 1/0 7/ 1994 .) ;

(ii) Co ntinui ng EM T of M ud ra R eso rts at Mumbai Goa Highw ay, Pa ncha t, Shepla s, Nagot han e, Tal R oha , Dist Raigad, ow ned by M/s Dw arka Milk And Mil k Produ cts Pv t. L td. ( Co mm on Security for M /s Dw arka Milk & Milk Produc ts Pv t L td.)

Primary Security to Term L oan s hall conti nue as co ntinui ng collateral securi ty to WC li mit and v ice v ersa .

Pers onal G uar antee of the foll ow ing:

(i) Kapil D Rajput Direct or ;

(ii) Mithilesh Rajput Direct or ;

(iii) Murugesan

Adimo olan Direct or ; (iv ) Hemal Joba nputra Direct or .

Co rp ora te G ua rantee: M/s Dw arka Milk & Milk Produc ts Pv t Ltd . Net Worth ₹ 45 9.7 9 la khs as per A BS as at 31 - 0 3- 2010.

Term loa n

U nav ailed limit- n ow cancell ed. - -

Tota l Amoun t - ₹ 625.0 0 lakhs

- -

04.01 .20 11

OC C /O DB D

₹ 625.00 lakhs

Rate of Intere st permit ted is @14.7 5% p.a . (Base Rat e + 4.00 % 10.75 % +4. 00 %) fl oating (HO Cir 225/ 2011) .

Pr ima ry – F or Wor king Ca pital Hyp otheca ti on o f St ock and Bo ok D ebts v alued at ₹ 11 48. 75 lak hs (o nly BD v alue) as per A B S as at 31- 0 3- 2011 .

Colla ter al -

(i) EMT of Com merc ial Shop 1 5, Sai Vihar 15, Plot No .78 ,79 ,80 CB D Belapur Nav i Mumbai, admea suring 774 Sq F t. super built- up area Ow ned by Shri Mithilesh D. Rajput (Leas e hold la nd fr om CID C O for 6 0 years fro m 0 1/0 7/ 1994 .) ;

(ii) Co ntinui ng EM T of M ud ra R eso rts at Mumbai Goa Highw ay, Pa ncha t, Shepla s, Nagot han e, Tal. R oha , Dis t. Raigad, ow ned by M/s Dw arka Milk And Mil k Produ cts Pv t.Ltd ( Co mm on Security for M /s Dw arka Milk & Milk Produc ts Pv t L td.)

Pers onal G uar antee of the foll ow ing:

(i) Kapil D Rajput Direct or ;

(ii) Mithilesh Rajput Direct or ;

(iii) Murugesan Adimo olan Direct or ; (iv ) Hemal Joba nputr a Direct or .

Co rp ora te G ua rantee: M/s Dw arka Milk & Milk Produc ts Pv t Ltd . Net Worth ₹ 45 9.7 9 la khs as per A BS as at 31 - 0 3-

2010.

Tota l Amoun t - ₹ 625.0 0 lakhs

- -

05.01 .20 12 Adhoc O C C limit ₹ 1.75 Cror es

2% ab ov e t he applicable ROI

The security av ailable for main /regular limit w ill conti nue for the abov e ad ho c limi t.

Tota l Amoun t - ₹ 1.75 Cr ore s

- -

On the dates given below, defendants signed and executed the loan and security documents as set out in paragraph nos. 5 (iv) to (xxxvi) of the Transferred Original Application. Defendants hypothecated entire stock including stock with processors/goods in transit should be fully insured Bank clause and original policy to be lodged with the Bank, Plant & Machinery to be acquired and new machineries from proposed Term loan, valued at ₹370.42 lakhs [₹105.53 lakhs[existing] As per valuation report dated 08.10.2009+ ₹264.89 Lakhs [New], Stock and Book Debts valued at ₹1156.28 lakhs (only BD value) as per stock & BD statement for Feb.2011 and Plant & Machineries Dist. Buldhana admeasuring 3 Acres land and building built up area 704.79 sq. and equitably mortgaged the following properties to secure the loan:

(i) EMT of all that pieces and parcels of land and factor building situated at Mudra Resorts at Mumbai Goa Highway at Shetpalas, Nagothane, Roha Taluka,

District Raigad (Resort with Furnished guest rooms admeasuring 19152 owned by M/s. Dwarka Milk & Milk Products Pvt. Ltd.;

(ii) EMT of all that pieces and parcels of land bearing Shop No.15, Sai Vihar, Near Reliance fresh Market, Sector 15, Plot Nos.78, 79 CBD Belapur, Navi Mumbai admeasuring 492 sq. ft in the name of Mr. Mithilesh Rajput and

(iii) Land and Factory building situated at A-84, MIDC Area Khamgaon, Dist. Buldhana, Maharashtra, admeasuring 3 Acres [12140.47 sq. mtrs] land and building, Plant and Machineries, Built up Area RCC 704.79 sq. mtrs. valued at ₹122.02 lakhs [Land ₹27.00 lakhs+Existing Building ₹78.70 lakhs] as per valuation report dated 08.10.2009 of P.K. Ghosh to secure the loan.

The details of the documents executed by the Defendants are as under: - (a) Office Sanction conveying Letter bearing Ref. No. CBCM/ADV/CR-2009 dated 04.11.2009;

(b) Board Resolutions dated 01.10.2009;

(c) Board Resolutions dated 02.11.2009;

(d) 3 Board Resolutions dated 03.11.2009;

(e) [NF-372] Request for Overdraft facilities dated 10.11.2009; (f) Pro-note [NF-480] for ₹9,64,00,000/- dated 10.11.2009; (g) Common Hypothecation Agreement dated 10.11.2009;

(h) Guarantee Agreement [NF-371] for ₹9,64,00,000/-, alongwith Guarantee covering letters, executed by the Defendants No.2 dated 10.11.2009;

(i) Guarantee Agreement [NF-371] for ₹9,64,00,000/-, along with Guarantee covering letters, executed by the Defendants No.3 dated 10.11.2009;

(j) Guarantee. Agreement [NF-371] for ₹9,64,00,000/-, alongwith Guarantee covering letters, executed by the Defendants No.4 dated 10.11.2009;

(k) Guarantee Agreement [NF-371] for ₹9,64,00,000/-, alongwith Guarantee covering letters, executed by the Defendants No.5 dated 10.11.2009;

(l) Guarantee Agreement [NF-371] for ₹9,64,00,000/-, alongwith Guarantee covering letters, executed by the Defendants No.6 dated 10.11.2009;

(m) Letter Evidencing Deposit of Title Deeds

[NF 461] dated 14.11.2009;

(n) Board Resolution dated 25.06.2010;

(o) Sanction conveying letter bearing Ref. No. CHEM/ADHOC/K MMIILK/2010 dated 25.06.2010;

(p) [NF 480] Pro-note for ₹1,00,00,000/- dated 25.06.2010; (q) [NF 386] Letter extending/ enhancing credit limits dated 25.06.2010; (r) Supplemental common Hypothecation Agreement dated 25.06.2010;

(s) Link Letter dated 25.06.2010;

(t) Annexure-3, Link Letter to be obtained when disbursement is done on a subsequent day dated 26.06.2010;

(u) Sanction conveying Letter bearing Ref. No. CHEM/KMM/2011 dated 31.03.2011;

(v) Board Resolution dated 05.01.2011;

(w) [NF-372] Request of Overdraft facility dated 27.04.2011;

(x) [NF-493] Letter of Renewal dated 27.04.2011;

(y) [NF

Acknowledgment of debts in respect of OCC facility dated 27.04.2011; (z) Letter from the Guarantor whenever limits are to be renewed executed by the Defendant No.2 dated 27.04.2011; (aa) Letter from the Guarantor whenever limits are to be renewed executed by the Defendant No.3 dated 27.04.2011;

(bb) Letter from the Guarantor whenever limits are to be renewed executed by the Defendant No.4 dated 27.04.2011;

(cc) Guarantor whenever limits are to be renewed executed by the Defendant No.4 dated 27.04.2011;

(dd) Letter from the Guarantor whenever limits are to be renewed executed by the Defendant No.5 dated 27.04.2011; (ee) Letter from the Guarantor whenever limits are to be renewed executed by the Defendant No.6 dated 27.04.2011; (ff) Sanction conveying letter bearing Ref. No. KMMILK/KCL/2011 dated 04.01.2012;

(gg) Board Resolution dated 05.01.2012;

(hh) [NF-493] Letter of Renewal dated 05.01.2012;

(ii) Letters from the Guarantor whenever limits are to be renewed executed by the Defendants No.2 dated 05.01.2012; (jj) Letters from the Guarantor whenever limits are to be renewed executed by the Defendants No.3 dated 05.01.2012; (kk) Letters from the Guarantor whenever limits are to be renewed executed by the Defendants No.4 dated 05.01.2012;

(ll) Letters from the Guarantor whenever limits are to be renewed executed by the Defendants No.5 dated 05.01.2012; (mm) Letters from the Guarantor whenever limits are to be renewed executed by the Defendants No.6 dated 05.01.2012; (nn) LEDTED executed by the Defendant No.1 dated 02.08.2012;

(oo) Sanction conveying letter reference No.MC/SMESULABH/2923/MMD/2012 dated 03.01.2012;

(pp) [NF 372] Request for Overdraft facilities dated 05.01.2012; (qq) [NF 480] Pro-note for ₹1,75,00,000/- dated 05.01.2012; (rr) Supplemental common Hypothecation Agreement dated 05.01.2012;

(ss) Guarantee Agreement [NF-371] each for ₹1.75 Lakhs, alongwith Guarantee covering letters executed by the Defendant No.2 dated 05.01.2012;

(tt) Guarantee Agreement [NF-371] each for ₹1.75 Lakhs, alongwith Guarantee covering letters executed by the Defendant No.3 dated 05.01.2012;

(uu) Guarantee Agreement [NF-371] each for ₹1.75 Lakhs, alongwith Guarantee covering letters executed by the Defendant No.4

dated 05.01.2012;

(vv) Guarantee Agreement [NF-371] each for ₹1.75 Lakhs, alongwith Guarantee covering letters executed by the Defendant No.5 dated 05.01.2012;

(ww) Guarantee Agreement [NF-371] each for ₹1.75 Lakhs, alongwith Guarantee covering letters executed by the Defendant No.6 dated 05.01.2012;

(xx) Copy of Original Letter of evidencing deposit of title deed dated 02.08.2012.

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 25.05.2012 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 ₹11,07,00,662/- (Rupees Eleven Crores Seven Lakhs Six Hundred Sixty-Two Only) as on 31.03.2014due under OCC/ODBD Loan & ADHOC Credit A/c. with further interest at the rate of 17.95% p.a. with monthly rest plus 2% p.a. penal interest due from 01.04.2014 till payment and/or realization within 7 days from receipt of the said notice. Despite notice, defendant nos. 1 to 6 failed and neglected to pay.

As on 31.03.2014, there was owing, due and payable by defendants to the applicant the aggregate sum ₹11,19,71,294.00/- (Rupees Eleven Crore Nineteen Lakh Seventy-One Thousand Two Hundred Ninety-Four Only) with future interest @17.95% per annum plus 2% penal interest with monthly rest. 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 22.04.2014.

The applicant has filed affidavit (exhibit-21) in lieu of examination in chief of Mr Nilam, Authorised Officer and list of documents (exhibit-

22) thereby adducing in evidence the documents at AW-1 to AW-60, which are admitted in evidence, read, recorded and exhibited.

Accordingly, in the Transferred Original Application was filed for the recovery of ₹11,19,71,294.00/- (Rupees Eleven Crore Nineteen Lakh Seventy-One Thousand Two Hundred Ninety-Four Only) with future interest @17.95% per annum plus 2% penal interest with monthly rest thereon from the date of presentation of the Transferred Original Application i.e. 22.04.2014 till payment/realisation.

The Applicant filed Additional Claim Affidavit for Adjustment of Claim Amount (Exh-21) dated 13.05.2026, it is stated that Applicant bank had sold the immovable property i.e. Shop No.15, Sai Vihar, Near Reliance fresh Market, Sector 15, Plot Nos.78,

CBD Belapur, Navi Mumbai admeasuring 492 sq. ft in the name of Mr. Mithilesh Rajput in e-auction method for a sum of ₹57,10,000/- (Rupees Fifty-Seven Lakhs Ten Thousand Only) in favour of M/s. Govardhani Construction Company and a Sale Certificate dated 24.03.2022 was issued.

The Tribunal has scrutinised and examined the avertions 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.1798 of 2016 is allowed with costs. (B) Defendant nos.1 to 6 are ordered and directed to pay to the applicant, either jointly or severally, the aggregate sum of ₹11,19,71,294.00/- (Rupees Eleven Crore Nineteen Lakh Seventy-One Thousand Two Hundred Ninety-Four Only) with future simple interest @ 12% thereon from the date of presentation of the Transferred Original Application i.e. 22.04.2014 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 Transferred Original Application No.1798 of 2016. (C) The aforesaid adjudicated amount is secured by the valid and subsisting hypothecated properties, that is, entire stock including stock with processors/goods in transit should be fully insured Bank clause and original policy to be lodged with the Bank, Plant & Machinery to be acquired and new machineries from proposed Term loan, valued at ₹370.42 lakhs [₹105.53 lakhs[existing] As per valuation report dated 08.10.2009+ ₹264.89 Lakhs [New], Stock and Book

Debts valued at ₹1156.28 lakhs (only BD value) as per stock & BD statement for Feb.2011 and Plant & Machineries Dist. Buldhana admeasuring 3 Acres land and building built up area 704.79 sq. mtrs. (D) The aforesaid adjudicated amount is secured by the valid and subsisting mortgaged immovable properties, that is,

(i) EMT of all that pieces and parcels of land and factor building situated at Mudra Resorts at Mumbai Goa Highway at Shetpalas, Nagothane, Roha Taluka, District Raigad (Resort with Furnished guest rooms admeasuring 19152 owned by M/s. Dwarka Milk & Milk Products Pvt. Ltd.;

(ii) Land and Factory building situated at A-84, MIDC Area Khamgaon, Dist. Buldhana, Maharashtra, admeasuring 3 Acres [12140.47 sq. mtrs] land and building, Plant and Machineries, Built up Area RCC 704.79 sq. mtrs. (E) Defendant no.1 to 6 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) defendants and (iii) the Recovery Officer by post and email.

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