BANK OF BARODA (DENA BANK) vs DESHMUKH NANASAHEB SAHEBRAO on 29 March 2019

1. Deshmukh Nanasaheb Sahebrao, Post : Karanjwan, Taluk : Dindori, District Nashik - 422 202 ) ... Defendant No. 1

2. Eknath Kachru Barde, Post : Oze, Tal : Dindori, District Nashik - 422 202 ) ... Defendant No. 2 Present : Ms. Sunita Rawat, Advocate, i/b 0 A Das, Counsel for Applicant Bank Mr. Prashant V Bhalerao, Advocate for Defendants This Original Application (OA) is filed by Applicant under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ("RDDB Act") (since changed to "Recovery of Debts and Bankruptcy Act, 1993") against the Defendants for the recovery of a sum aggregating to Rs. 27,19,016/- (Rupees Twenty Seven lacs Nineteen thousand and Sixteen only) in respect of the various credit facilities mentioned in the OA alongwith cost, charges, pendente lite future interest as stated therein from the date of filing of this OA till its realisation.

Parties : Applicant is a Bank within Sec. 2(d) of the RDDB Act and lender of credit facilities to Defendant No. 1 and Defendant No. 2 provided additional security by way of personal guarantee for the credit facilities. Factual matrix :

1. (a) As per OA, Applicant provided to Defendant No. 1, credit facility in the form of Term Loan of Rs. 8,97,000/- ("TL") and DKCC Limit of Rs. 5,24,000/- ("DKCC Facility")(TL and DKCC Facility are hereinafter collectively called "Credit Facilities") based on the documentation and security creation by him and the additional security of personal guarantee by Defendant No. 2 and one Ramesh Bhaurao Deshmukh for TL and Defendant No. 2 alone for DKCC Facility. The Credit Facilities were additionally secured by Defendant No. 1 by way of mortgage security on his agricultural lands located at Village Karanjwan, Taluk Dindori, District Nashik, with Defendant No. 1 executing Declaration under Sec. 5 of Maharashtra Provision of Facilities for Agricultural Credit by Bank Act, 1974 and getting the same registered with SRO, Dindori besides recording the same under 7 / 12 Record.

(b) At the request of Defendant No. 1, Applicant restructured the outstanding amounts of DKCC Facility into Working Capital Term Loan ("WCTL") on the terms and conditions set out in the Agreement for Restructure of Credit Facilities executed by Defendant No. 1.

(c) As per the OA, the Defendant No. 1 failed and neglected to make payment of principal, and other monies as and when they fell due. It is further averred that Defendant No. 1 committed various breaches of the terms and conditions contained in the documents governing the Credit Facilities. Applicant issued Recall Notice to the Defendants, calling upon them to repay the entire outstanding amount of the Credit Facilities. The Recall Notice was not issued against Ramesh Bhaurao Deshmukh who was a guarantor in respect of TL. Since the Defendants did not repay as called upon, the OA has been filed.

2. (a)Tribunal, after satisfying itself of the OA being within limitation and falling within its territorial jurisdiction as per RDDB Act, ordered issue of Summons to Defendants.

(b) On transfer of the case to this Tribunal, Transfer Notices were sent to the Defendants by Registered Post with Acknowledgement Due. Mr. Prashant V Bhalerao, Advocate, filed Vakalatnama on behalf of the Defendants.

(c) Though the Advocate for the Defendants did appear on several hearings, failed to file Written Statement, resulting in the Tribunal passing on 20/04/2018 an Order to proceed "Without Written Statements" against the Defendants. Proceedings :

3. As directed by the Tribunal, Applicant filed, through Shri. Mukeshkumar Chate, Chief Manager, Claim Affidavit enclosing various Documents as Annexures (which have been taken on record by the Tribunal and marked as "Exhibits") and also filed Certified Statement of Account together with the Certificate issued under Information Technology Act, 2000 and Certificates under Bankers Books of Evidence Act, 1891, as Annexures (which are marked as Exhibit "26" & "27"). Subsequently a pursis was filed enclosing the Declaratory Mortgage securing the Credit Facilities (Exh "29"). Of the Documents filed as Exhibits and gone through by the Tribunal, the following are found relevant for the Tribunal to consider and dispose of the OA on merit. S. No. Facility Document Exhibit

1. Term Loan (Rs. 8,97,000/ -) Hypothecation Agreement (Original) "11" Personal Guarantee of Def

& Ramesh Bhaurao Deshmukh (Orl) "14"

Demand Promissory Note (Original) "15"

2. DKCC Facility (Rs. 8,58,000/ -) Hypothecation Agreement (Original) "16" Personal Guarantee of Def 2 (Orl) "20"

Demand Promissory Note (Original) "21"

Agreement for conversion, into WCTL (Original) "23"

3. Common for all Credit Facilities Mortgage by way of Declaration by Def 1 and Regd with SRO, Dindori (Original) "29" Recall Notice (Office Copy) "25" Observation on Evidences provided& Claim made :

4. The Statement of Account filed by the Applicant, certified as per Bankers Books of Evidence Act, 1891, tallied with claim in OA. Further, the case of the Applicant is based on various Documents (including the above referred Exhibits) filed alongwith Claim Affidavit, which is a sworn Statement, which has gone unchallenged. In my view, there is no question of disbelieving the Exhibits and Claim Affidavit and other evidences let in by the Applicant and the Applicant has proved its case beyond reasonable doubt to the extent of sanctioning the Credit Facilities, completing Documentation and disbursement of the Credit Facilities.

5. The Applicant has claimed interest at the rate of 11.75% p.a. with yearly rests for all the facilities from the date of filing of the OA till its realisation. Having regards to Sec. 19(20) of the RDDB Act (which is analogous to Sec. 34 of Civil Procedure Code, 1908) the contract between the Applicant and Defendants comes to an end on the filing of the OA.Thus the Tribunal has discretion in awarding pendente lite and future interest. Considering the rate of interest charged by banks for similar facilities, I am of the opinion that interest of justice will be served if the rate interest is awarded at the rate of 11.00% p.a. on simple interest basis.

6. In the light of above discussions, the Original Application is being allowed and Order passed on the following terms.

ORDER

(i) This Original Application is allowed with costs and decree to be issued on the terms set out below;

(ii) There shall be a Decree in favour of the Applicant as under - (a) For Rs. 17,29,016/- (Rupees Seventeen lacs Twenty Nine thousand and Sixteen only) alongwith future interest at the rate of 11.00% per annum (on simple interest basis) from the date of filing of the Original Application till the date of realisation in respect of Term Loan ("Decreed Amount for TL"); (b) For Rs. 9,90,000/- (Rupees Nine lacs and Ninety thousand only) alongwith future interest at the rate of 11.00% per annum (on simple interest basis) from the date of filing of the Original Application till the date of realisation in respect of DKCC Facility("Decreed Amount for DKCC");

(iii) Defendant No. 1, the Borrower, and Defendant No. 2, the Guarantor, are ordered to pay, jointly and severally, to the Applicant, within a period of 30 days, the Decreed Amount for TL and, in the event of the said Defendants failing to pay and discharge the dues as directed or in the event of shortfall, the assets forming security for the Term Loan (covered by Exh "11" being the moveable assets charged & Exh "29" being the immoveable properties mortgaged) be attached / taken possession of and be sold to the extent of realising the dues / shortfall, as the case may be, and in the event of further shortfall, the said Defendants be proceeded against personally by way of personal decree and business assets / personal assets / estates of Defendant No. 1 and personal assets / estates of Defendant No. 2 be attached and sold for realising the dues / shortfall, as the case may be;

(iv) Defendant No. 1, the Borrower, and Defendant No. 2, the Guarantor, are ordered to pay, jointly and severally, to the Applicant, within a period of 30 days, the Decreed Amount for DKCC and, in the event of the said Defendants failing to pay and discharge the dues as directed or in the event of shortfall, the assets forming security for the DKCC Facility (covered by Exh "16" being the moveable assets charged & Exh "29" being the immoveable properties mortgaged) be attached / taken possession of and be sold to the extent of realising the dues / shortfall, as the case may be, and in the event of further shortfall, the said Defendants be proceeded against personally by way of personal decree and business assets / personal assets / estates of Defendant No. 1 and personal assets / estates of Defendant No. 2 be attached and sold for realising the dues / shortfall, as the case may be;

(v) Based on the Original Documents placed before this Tribunal, supported by the pleadings, it is Declared that there is a valid, subsisting and enforceable hypothecation / charge on the moveable assets of the Defendant No. 1, the Borrower, as per Exh "11" and "16" in favour of the Applicant validly securing the Term Loan and DKCC Facility;

(vi) Based on the Original Documents placed before this Tribunal, supported by the pleadings, it is Declared that there is a valid, subsisting and enforceable mortgage over the immoveable properties described in Exh "29" in favour of the Applicant validly securing the Term Loan and DKCC Facility;

(vii) Defendant No. 1 and 2are directed to declare, on oath, to the Recovery Officer, Debts Recovery Tribunal - III, Mumbai, both moveable and immoveable assets oftheirs as also Defendant No. 1 is directed to declare, on oath, both moveable and immoveable assets of business carried on by him for the purpose of attachment and sale as directed under Clause (iii) and / or Clause (iv)above;

(viii) Defendant No. 1 to 4 are injuncted from dealing with the assets described in Exh "11"& "16" and Exh "29" as also assets declared on oath as per Clause (vii) above in any manner whatsoever till the complete recovery of Decreed Amounts under Clause (ii) above;

(ix) Recovery Certificates be issued forthwith as per above decrees and sent to the Recovery Officer, Debts Recovery Tribunal - III, Mumbai;

(x) Parties are directed to appear before the Recovery Officer, Debts Recovery Tribunal - III, Mumbai;

(xi) Copies of final order be sent to all concerned free of cost and File be consigned to records. T S Asokr Presiding Officer, Debts Recovery Tribunal - III, Mumbai. (Pronounced in open Court) Dated : 29th March 2019