BANK OF BARODA vs SHASHIKALA on 27 March 2019

1.

2. Mrs. Shashikala Bajirao Kadam, ) Post : Korate, Tal : Dindori, Dist Nashik - 422 001) Mr. Vishnu Govind Shinde, ) Post : Korate, Tal : Dindori, Dist : Nashik - 422 001) Defendant No. 1 Defendant No. 2

3. Mr. Sanjay Vishnu Kadam, ) Post : Korate, Tal : Dindori, Dist : Nashik - 422 001) Defendant No. 3

4. Mr. Motiram Damu Malsane, ) Post : Korate, Tal : Dindori, Dist : Nashik - 422 001) Defendant No. 4

5. Mr. Manohar Parashram Kadam, ) Post : Korate, Tal : Dindori, Dist : Nashik - 422 001) Defendant No. 5

6. Mr. Prabhakar Vishnu Shinde, ) Post : Korate, Tal : Dindori, Dist : Nashik - 422 001) Defendant No. 6

7. Mr. Sadashiv Tryambak Bombale, ) Post : Korate, Tal : Dindori, Dist : Nashik - 422 001) Defendant No. 7

Present: Shri. C R Shah, Advocate, i/b Rajesh L Shethia, Counsel for Applicant Bank Defendants remained ex-parte 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. 21,84,043/- (Rupees Twenty One lacs Eighty Four thousand and Forty Three 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, an agriculturist by occupation, and Defendant No. 2 to 7 provided their personal guarantees as additional securities for different credit facilities in different combinations as stated below. . Factual matrix :

1. (a) As per OA, Applicant provided to Defendant No. 1 credit facilities of Term Loan of Rs. 3,60,000/- ("TL-1"), Term Loan of Rs. 3,60,000/- ("TL-2"), Crop Loan (under DKCC Scheme) of Rs. 1,68,000/- ("CL-1") and Crop Loan (under DKCC Scheme) of Rs. 7,45,000/- ("CL-2") (TL-1, TL-2, CL-1 and CL-2 are collectively called "Credit Facilities") based on the documentation and security creation by her and the additional security of personal guarantee provided by Defendant No. 2 and 3 (for TL-1), by Defendant No. 4 and 5 (for TL-2), by Defendant No. 4 and 5 (for CL-1) and by Defendant No. 6 and 7 (for CL-2), (b) As prelude to availing the Credit Facilities, Defendant No. 1 created mortgage on her agricultural land located in Village Korhate, Taluk Dindori, District Nashik, by 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 getting the Declaration registered in the 7 / 12 Register under Maharashtra Land Revenue Code, 1966.

(c) At the request of Defendant No. 1, Applicant rescheduled the overdue Instalments of the TL-1 and TL-2 and restructured the outstanding CL-1 into Working Capital Term Loan ("WCTL") and Applicant executed Agreements for Restructuring of Credit Facilities accepting the restructuring and rescheduling and the terms and conditions thereof.

(d) As per OA, Defendant No. 1 was highly irregular in operating the accounts of the Credit Facilities resulting in interest for several months and several instalments of TLs remaining unpaid with further averment that Defendant No. 1 committed various irregularities and breaches of the terms and conditions of sanction as well as various security documents pertaining to the Credit Facilities. Applicant issued Advocate's Notice calling upon the Defendants to repay the entire outstanding amount of the Credit Facilities and, on the Defendants' failure to repay, 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, which was served on the Defendants.

(b) On transfer of the OA to this Tribunal, Transfer Notices to the Defendants were sent by Registered Post with Acknowledgement Due. Postal covers addressed to Defendant No. 1, 2, 5 and 6, got delivered and Acknowledgement Due Cards received back. As regards Defendant No. 4, since Acknowledgement Due Card was not received back, Applicant downloaded delivery status from the postal site for computerised postal article delivery tracking system, as per which the postal cover got delivered on Defendant No. 4. As regards Defendant No. 3 and 7, the postal covers returned undelivered with postal endorsement "Not Claimed". Applicant filed Service Affidavit. As per Regulation 19 of The Regulations of Practice 2010 (framed pursuant to power conferred under sub- Section(1) of Section 22 of RDDB Act), the Transfer Notices are deemed to have been served on Defendant No. 3 and 7.

(c) As Defendants did not appear either in person or through advocate and file Written Statements, the Defendants were set ex-parte on 05/03/2019 by an Order of the Tribunal. Proceedings :

3. As directed by the Tribunal, Applicant filed, through Shri. Jayant Bapat, 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 Certificates under Bankers Books of Evidence Act, 1891, as Annexures (which are marked as Exhibit "48", "49", "50" & "51"). 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 -1 (Rs. 3,60,000/ -) Appraisal-cum-Sanction Memorandum (Office Copy) "13"

Hypothecation - Agreement for Agri. Loans (Original) "14"

Demand Promissory Note (Original) "15"

Personal Guarantee of Def 2 & 3 (Original) "17" Agreement for Reschedulement (Original) "45-B"

2. Term Loan - 2 (Rs. 3,60,000/ -) Appraisal-cum-Sanction Memorandum (Office Copy) "20"

Hypothecation - Agreement for Agri. Loans (Original) "21"

Demand Promissory Note (Original) "22"

Personal Guarantee of Def 4 & 5 (Original) "24"

Agreement for Reschedulement (Original) "45-A"

3. Crop Loan - 1 (Rs. 1,68,000/ -) Since converted to Working Capital Term Loan Appraisal-cum-Sanction Memorandum (Office Copy) "27"

Hypothecation - Agreement for Agri. Loans (Original) "28"

Demand Promissory Note (Original) "29"

Personal Guarantee of Def 4 & 5 (Original) "32" Agreement for Restructuring (Original) "45-C"

4. Crop Loan - 2 (Rs. 7,45,000/ -) Appraisal-cum-Sanction Memorandum (Office Copy) "35"

Hypothecation - Agreement for Agri. Loans (Original) "36"

Demand Promissory Note (Original) "37"

Personal Guarantee of Def 6 & 7 (Original) "40"

5. Common for all Credit Facilities Mortgage by way of Declaration by Def

Regd with SRO, Dindori (Original) with 7 / 12 Extract "43" Recall Notice (Office Copy) "47" 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 10.00% p.a. with yearly rests for TL-1, at the rate of 11.50% p.a. with yearly rests for TL-2, at the rate of 11.25% p.a. with yearly rests for WCTL (arising out of restructuring of CL-1) and at the rate of 10.00% p.a. with yearly rests for CL-2, all 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 10.00% p.a. on simple interest basis for all the facilities.

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. 5,67,709/- (Rupees Five lacs Sixty Seven thousand Seven hundred and Nine only) alongwith future interest at the rate of 10.00% 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 - 1 ("Decreed Amount for TL-1");

(b) For Rs. 7,57,406/- (Rupees Seven lacs Fifty Seven thousand Four hundred and Six only) alongwith future interest at the rate of 10.00% 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 - 2 ("Decreed Amount for TL-2");

(c) For Rs. 2,45,703/- (Rupees Two lacs Forty Five thousand Seven hundred and Three only) alongwith future interest at the rate of 10.00% per annum (on simple interest basis) from the date of filing of the Original Application till the date of realisation in respect of Crop Loan - 1 under DKCC Scheme since converted to Working Capital Term Loan ("Decreed Amount for WCTL"); (d) For Rs. 6,13,225/- (Rupees Six lacs Thirteen thousand Two hundred and Twenty Five only) alongwith future interest at the rate of 10.00% per annum (on simple interest basis) from the date of filing of the Original Application till the date of realisation in respect of Crop Loan - 2 under DKCC Scheme ("Decreed Amount for CL-2");

(iii) Defendant No. 1, the Borrower, and Defendant No. 2 and 3, the Guarantors, are ordered to pay, jointly and severally, to the Applicant, within a period of 30 days, the Decreed Amount for TL-1 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 - 1 (covered by Exh "14" being the moveable assets charged & Exh "43" 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 and 3 be attached and sold for realising the dues / shortfall, as the case may be;

(iv) Defendant No. 1, the Borrower, and Defendant No. 4 and 5, the Guarantors, are ordered to pay, jointly and severally, to the Applicant, within a period of 30 days, the Decreed Amount for TL-2 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 - 2 (covered by Exh "21" being the moveable assets charged & Exh "43" 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. 4 and 5 be attached and sold for realising the dues / shortfall, as the case may be;

(v) Defendant No. 1, the Borrower, and Defendant No. 4 and 5, the Guarantors, are ordered to pay, jointly and severally, to the Applicant, within a period of 30 days, the Decreed Amount for WCTL 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 Working Capital Term Loan (arising out of conversion of Crop Loan - 1) (covered by Exh "28" being the moveable assets charged & Exh "43" 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. 4 and 5 be attached and sold for realising the dues / shortfall, as the case may be;

(vi) Defendant No. 1, the Borrower, and Defendant No. 6 and 7, the Guarantors, are ordered to pay, jointly and severally, to the Applicant, within a period of 30 days, the Decreed Amount for CL-2 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 Crop Loan - 2 (covered by Exh "36" being the moveable assets charged & Exh "43" 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. 6 and 7 be attached and sold for realising the dues / shortfall, as the case may be;

(vii) 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 "14", "21", "28" & "36" in favour of the Applicant validly securing the Rupee Term Loan - 1, Rupee. Term Loan - 2, Working Capital Term Loan (arising out of Restructuring of Crop Loan - 1) and Crop Loan - 2;

(viii) 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 "43" in favour of the Applicant validly securing the Rupee Term Loan - 1, Rupee Term Loan - 2, Working Capital Term Loan (arising out of Restructuring of Crop Loan - 1) and Crop Loan - 2;

(ix) Defendant No. 1 to 7 are directed to declare, on oath, to the Recovery Officer, Debts Recovery Tribunal - III, Mumbai, both moveable and immoveable assets of theirs as also Defendant No. 1 is directed to declare, on oath, both moveable and immoveable assets of the business carried on by her for the purpose of attachment and sale as directed under Clause (iii) and / or Clause (iv) and / or Clause (v) and / or Clause (vi) above;

(x) Defendant No. 1 to 7 are injuncted from dealing with the assets described in Exh "14", "21", "28" & "36" and Exh "43" as also assets declared on oath as per Clause (ix) above in any manner whatsoever till the complete recovery of Decreed Amounts under Clause (ii) above;

(xiii) Copies of final order be sent to all concerned free of cost and File be consigned to records. S Asok Presiding Officer, Debts Recovery Tribunal - III, Mumbai.

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

(xii) Parties are directed to appear before the Recovery Officer, Debts Recovery Tribunal - III, Mumbai; (Pronounced in open Court) Dated : 27th March 2019