BANK OF BARODA vs M/S L K INDUSTRIES PVT LTD on 27 July 2020

J U D G E M E N T

1. This is an application under sub-section (1) of section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short “The 1993 Act”) for the recovery of the dues in the sum of Rs.7,67,02,094/- together with future interest thereon from the date of filing of Original Application till repayment/realization and also for enforcement of the securities. The factual matrix of the case is as under:-

2. Defendant no.1 is the principal borrower, defendant nos. 2 & 3 are the guarantors and defendant no.2 is sued in his capacity as mortgagor also.

3. Defendant no.1 is the company incorporated under the provisions of the Companies Act, 1956 having its registered office at address mentioned in the cause title of the O.A.

4. Defendant no.1 approached the applicant seeking financial assistance. Pursuant to the loan application made by defendant no.1, the applicant, vide sanction letter dated 3 rd February 2014, sanctioned Cash Credit (Hypothecation of Stocks and Book Debts) facility in the sum of Rs.300 Lakhs and Term Loan facility in the sum of Rs.360 Lakhs. Defendant no.1 requested the applicant to modify the terms and conditions of the sanction, which was accepted.

5. On 21st March 2014, defendant no.1 signed and executed the loan and security documents as set out in Para 5(E) and (F) of the O.A.

6. On 21st March 2014, defendant no.2 created mortgage by deposit of title deeds with regard to the immovable property described in the Second schedule thereto. Defendant no.2 with an intend to create an equitable mortgage deposited and delivered the title deeds more particularly described in First schedule thereto. The defendant no.2 also executed letter of confirmation of mortgage on 21 st March 2014.

7. Upon sanction of the facilities by the applicant, the defendant no.1 company purchased 24 Rapier Looms machinery for the business purpose.

8. On 21st March 2014, defendant nos.2 & 3 executed general form of guarantee for aggregate limit of Rs.6.60 Crores in their personal capacity.

9. After availing the credit facilities, defendant no.1 did not adhere to the terms of sanction and contract. The account of defendant no.1 was classified as Non Performing Asset [NPA] on 25th March 2015. The applicant made several request and sent various reminders to regularize the account. However, defendant no.1 failed and neglected to do so. The applicant, was left with no other alternative but to issue the demand notice from its advocate on 27 th November 2015 calling upon defendant nos.1 to 3 to make payment with the sum of Rs.7,67,02,094/-. Despite notice, the defendants failed and neglected to make the payment.

10. There is now, owing, due and payable by defendant nos.1 to 3 to the applicant to the aggregate sum of Rs.7,67,02,094/-. The applicant bank has maintained the loan ledger extract and entries posted therein are made in the usual and ordinary course of banking business which is supported by the certificate as required by the law. Since defendants failed and neglected to make the payment, the applicant was left with no other alternative but to file this Original Application on 5th January 2016.

11. Defendants were duly served with the summons. Despite service of summons, defendants did not choose to appear. Therefore, on 4th October 2017, defendants were set ex parte. I have perused ordersheet which does not show that defendants nos.1 to 3 has made any application for setting aside the order dated 4 th October 2017.

12. Based on the pleadings, the applicant has filed affidavit [Exh.24] of Ms. Bhavana Avinash Desai, Chief Manager, evidencing the claim and list of documents [Exh.25] thereby adducing the documents marked at Exh.27 to 62 which are admitted in evidence, read, recorded and exhibited.

13. I have scrutinized and examined the allegations made in the Original Application and analysed the evidence adduced by the applicant which has gone unchallenged, uncontroverted and unrebutted.

14. Mr. Shinde for the applicant submits that pendent lite and future interest @12.65% p.a. with regard to the cash credit facility and @12.80% p.a. with regard to the term loan facility be granted.

15. Mr. Shinde further submits that the applicant does not press into service relief with regards to penal interest @2% p.a. as claimed in Prayer (A) & (B).

16. Mr. Shinde further submits that the applicant does not press into service relief in terms of prayer clause (E).

17. The applicant has adduced in evidence the memorandum of deposit of title deeds [Exh.47] and letter of confirmation of mortgage [Exh.49]. Thus, I am satisfied that the applicant has pleaded, established and proved the creation of mortgage for security of the loan. I therefore hold that the defendant no.1 is entitle d for redemption of mortgage.

18. The hypothecated movables are described in the agreement of hypothecation [Exh.34 & 35], I grant hypothecation security.

19. Upon careful scrutiny and examination of the Original Application, analyzing the evidence and giving due weightage to the documentary evidence adduced by the applicant, I am of the view that there is no reason to disbelieve the claim made by the applicant bank.

20. In view of the observations made hereinabove, the Original Application filed by the applicant deserves to be granted. Hence, I pass the following order:-

O R D E R

A) Original Application No.964 of 2016 is allowed with cost.

B) Defendant Nos.1 to 3 are ordered and directed to pay to the applicant either jointly and severally the sum of Rs.3,55,54,072/- (Rupees Three Crores Fifty Five Lakhs Fifty Four Thousand Seventy Two only) with regard to cash credit facility and the sum of Rs.4,11,48,022/- (Rupees Four Crores Eleven Lakhs Forty Eight Thousand Twenty Two only) with regard to term loan facility aggregating in the sum of Rs.7,67,02,094/- (Rupees Seven Crores Sixty Seven Lakhs Two Thousand Ninety Four only) with pendent lite and future interest @12.65 % p.a. (cash credit facility) and @12.80% p.a. (term loan facility) from the date of filing of the Original Application i.e. 5th January 2020 till payment/realization. C) The aforesaid adjudicated amount is secured by the valid and subsisting mortgage of the immovable property i.e. all that pieces and parcel of land with plinth admeasuring about 3812 sq. ft., equivalent to 354.27 sq. mtrs. Or thereabout bearing Plinth No.F - 8 of Shed No.F, Oswal Industrial Complex, Sonale Bhiwandi, constructed on land bearing S. No.221/10 paiki at Village Sonale Taluka Bhiwandi District Thane and Sub Division and sub registration office Bhiwandi and Division and District Thane and Office No.105 on the First Floor, in the building known as ‘The Crescent Business Park, situated at land bearing CTS No.783/5, Sakinaka, Mohili Village, Andheri-Kurla, Mumbai 400 072. D) The aforesaid adjudicated amount is also secured by hypothecation of the 24 machineries namely Rapier Loom SM 93 220 mm at RPM 350-400, with Micro Processor Electronic Controls & Mechanical Dobby 2232 Stubbly, Slector dobby fully computerised (Invoice No.0002 dt.08.04.2014, 0006 dt.17.04.2014, 0009 dt.26.04.2014, 0012 dt.02.05.2014, 042 dt.28.08.2014, 0049 dt.20.09.2014, 0019 dt.22.05.2014)

E) Defendant No.2 is granted liberty to redeem the mortgage property within the period of three months from the date hereof failing which the applicant bank become entitle to sale the mortgaged property in accordance with the law and appropriate the sale proceeds therefore. F) Issue Recovery Certificate Accordingly. G) The Registrar is directed to send the copy of the judgment and recovery certificate to the applicant and defendants.

(Deepak M. Thakkar) Presiding Officer, Debts Recovery Tribunal No.2, Mumbai Dhawale