PEGASUS ASSETS RECONSTRUCTION PRIVATE LIMITED vs M/S SARUTA ORGANICS INDIA PVT LTD on 9 October 2019

1. Saruta Organics India Pvt. Ltd., ) Regd Office :1, Anupam Vill it , Kamani,) Andheri-Kurla Roa. Mumb

) Defendant No. 1

2. Mr. Vilas Kashinath Son ) (Director of Defen ompany) ) Off. Address: n illa, Bail Bazar, Kamani) Andheri-Kua R d, Ivlumbai - 400 070 ) Defendant No. 2

3. Smt. nath Sonawane, ) Dire D ndant No. 1 Company) ) 1, Anupam Villa, Bail Bazar, Kamani) A ktheri4Kurla Road, Mumbai - 400 070 ) .... Defendant No. 3 Present : Mr. Jayesh R Patel, Advocate, Counsel for Applicant 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. 4,26,37,261/51 (Rupees Four crores Twenty Six lacs Thirty Seven thousand Two hundred and Sixty One and paise Fifty One only) in respect of the credit facility 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 "Company" registered under the Companies Act, 1956 which is registered as "Asset Reconstruction Company" under Sec. 3 of Se tisation and Reconstruction of Financial Assets and Enforcement of Security Interest 002 (in short "SARFAESI Act") and a "financial institution" within Sec. 2(h) of RDDB Act. Catholic Syrian Bank Limited, a Banking Compan within Banking Regulation Act, 1949, and a "Bank" within Section 2(d) of R t (hereinafter referred to as "CS Bank") provided the credit facility, forming subj -Ct matter of this OA, to Defendant No. 1 and the said credit facility alongwith underlying security was assigned and transferred absolutely to the Applicant under a Registered Assignment Deed dated 26/03/2014. Defendant No. 1, the borroc\ er, s a private limited company registered under the A Companies Act, 1956 ("Detendint No. 1 Company") with Defendant No. 2 and 3 as its Directors who also provided personal guarantee besides Defendant No. 3 mortg ng her immoveable property, as additional securities for the credit facility availed fendant No. 1 Company from CS Bank. Factua trix :

1. (a) As per OA, CS Bank provided Cash Credit Facility of Rs. 200 lacs ("CCF") to the Defendant No. 1 Company based on the documentation and security creation by the authorised Directors of the Defendant No. 1 Company, who executed all the documents for and on behalf of and in the name of Defendant No. 1 Company. Defendant No. 2 and 3, in their personal capacity, executed joint and several personal guarantee and also Defendant No. 3 created mortgage on her immoveable property being Plot No. 30 in Kalpataru Industrial Premises Co-operative Society Limited located in Kolshet Road in Manpada, Dhokali Naka in District Thane ("the said Immoveable Property") by way of Mortgage by Deposit of Title Deeds as additional securities for the CCF. Defendant No. 1 Company filed necessary Statutory Forms with Registrar of Companies in respect of charge created in respect of its assets as per the requirements of the Companies Act, 1956.

(b) As per the OA, the Defendant No. 1 Company defaulted in re Tment of the dues in respect of CCF in violation of the sanction terms, loan doc eats and 40e other conditions. Consequently, CS Bank classified the account as Non- Performing Asset on 31/12/2010 as per Regulatory Guiceines and initiated action for recovery by invoking provisions of SARFAESI Act and also obtained Order under Sec. 14 of SARFAESI A District> Magistrate, Thane for taking physical possession of the said Immo e Property on which CS Bank had mortgage right. However because of the, Defendants filing Application under Sec. 17 of SARFAESI fit, the physical possession of the said Immoveable Property could not be to en.' Subsequently CS Bank assigned the CCF alongwith underlying secfie Applicant under Registered Assignment Deed dated 26/03/2014. Afte .ecoming assignee of the CCF, the Applicant filed fresh app fi6i1 under Sec. 14 of the SARFAESI Act with the District Magistrate, Thinetd obtained Order dated 19/11/2016. Applicant also inidated recoverv'Jrction under RDDB Act and the OA has been filed. al, fter satisfying itself of the OA being within limitation and falling its territorial jurisdiction as per RDDB Act, ordered issue of Summons to Defendants.

(b) After transfer of the OA to this Tribunal, Transfer Notices were ordered to be issued and were sent by Speed Post with Acknowledgement but could not be served and returned with postal endorsement "Not known". Hence, on an application taken out by the Applicant, Tribunal allowed substituted service through paper publication which was carried out by the Applicant and filed Service Affidavit.

(c) As Defendants did not appear either in person or through advocate and file Written Statements, the Defendants were set ex-parte on 02/08/2018 by an Order of the Tribunal. Proceedings :

3. As directed by the Tribunal, Applicant filed, through Mrs. Jayadeesh, Senior Manager, Claim Affidavit (Exh "7") enclosing various D ments as Annexures (which have been taken on record by the Tribunal and marked as "Exhibits") and also filed Certified Statement of Account (ereceived from CS Bank) together with the Certificate issued under Information Technology Act, 2000 as Annexure (which is marked as Exhibit "22" & "23"). Subsequently, Supplemental Claim Affidavit (Exttt "O") was filed by Ms. Lopa Joshi, Manager, enclosing certain doi,iipen'pertaining to the said Immoveable Property, which constitutes mortgage for iothe CCF. A further Supplemental Claim Affidavit (Exh "36") was filed by Ms. Lopa Joshi, Manager, enclosing some more documents pe a g to the said Immoveable Property. All the documents have been take on record by the Tribunal and marked as "Exhibits". Of the ocuments filed as Exhibits and gone through by the Tribunal, the fi.;11mA ing are found relevant for the Tribunal to consider and dis ose of the OA 9rf merit. S. Facility Document Exhibit \ 'ash se • Credit Facility (Rs. 200,00,000/-) Sanction Letter (Office Copy) "10" Demand Promissory Note (Original) "12"

Agreement of Hypothecation (Orl) "13"

Certificate of Registration of Charge (Original) "14"

Personal Guarantee of Def 2 Sr 3 (Original) "15"

Agreement i/f of Def 3 i/r of the said "32" Immoveable Property (Regd with SRO, Thane as Doc No. 2758 of 1988) (Original) Share Certificate issued by Society i/f of Def 3 (Original) "35" Confmn Ltr by Def 3 i/r of depo it of title deeds i/r of mortgage (OPigi "16" Balance Confirmation Letter b e "18"

(Original) Revival Letter by De 1 (Original) "19"

A d.' Observation on Evidences provided& Claim made :

4. The Statement of Account filed by lin• licant as received from CS Bank (the original lender of CCF) (Exh "22 h claim in OA. Further, the case of the Applicant is based on various D ents (including the above referred Exhibits) filed alongwith C Affidavit, which is a sworn Statement, which has gone unchallenged as t dants remained ex-parte. In my view, there is no question of disbelieving the Exhibits and Claim Affidavit / Supplemental Claim Affidavit d 'ttller evidences let in by the Applicant, and the Applicant has proved iti.:a,,L31.4yond reasonable doubt to the extent of sanctioning the C by CS Bank;completing documentation and disbursement of / drawl out om CS Bank as borne out by Statement of Account maintained by CS fied copy of which as received from CS Bank was filed by the

5. The Applicant has claimed interest at the rate of 14.25% p.a. payable with monthly rests plus penal interest at the rate of 1% p.a. on simple interest basis, with all interests to commence 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 CS Bank (and 4'

ORDER

(i) This Original Application is allowed with costs an terms set out below; ee to be issued on the consequently the Applicant, as Assignee) 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 facility, I am of the opinion that interest of justice will be served if the rate interest is awarded at the rate of 12% p.a. on simple interest basis for both the facilities.

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

(ii) There shall be a Decree in favour t Applicant for Rs. 4,26,37,261/51 (Rupees Four crores Twenty Six lacs Thirty Seven thousand Two hundred and Sixty One and paise Fifty40 ply) alongwith future interest at the rate of 12.00% per annum (on simp e interest basis) from the date of filing of the Original Applicat on till the date of realisation in respect of Cash Credit Facility ("Decreed Annount for.CCF");

(iii) De nt No. 1 Company, the Borrower, and Defendant No. 2 and 3, the and Defendant No. 3, the Mortgagor, are ordered to pay, jointly everally, to the Applicant, within a period of 30 days, the Decreed Amount for CCF and in the event of the Defendants failing to pay and discharge the dues as directed or in the event of shortfall, the assets forming as security for the Cash Credit Facility (covered by Exh "13" being the moveable assets charged & Exh "32" being the immoveable property mortgaged by Defendant No. 3) 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

licant validly shortfall, the Defendants be proceeded against personally by way of personal decree and business assets / other assets of Defendant No. 1 Company 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) Based on the Original Documents placed before this Tribunal, supported by the pleadings, it is Declared that there is a valid, subsisting an orceable hypothecation / charge on the moveable assets of the efenda No. 1 Company, the Borrower, as per Exh "13" in favour of the securing the Cash Credit Facility;

(v) Based on the Original Documents placed befoxi tlu ribunal, supported by the pleadings, it is Declared that there is a valid, sub sting and enforceable mortgage over the immoveable pr ►e te described in Exh "32" in favour of the Applicant validly securing th sh Creit Facility;

(vi) Defendant No. 2 and 3 are di ected to declare, on oath, to the Recovery Officer, Debts Recovery Tribunal - I bai, both moveable and immoveable assets of theirs as also Defendant Imo. 2 and 3, as Directors of Defendant No. 1 Company, are 'recre,d to declare, on oath, both moveable and immoveable assets of Defjridant No 1 Company for the purpose of attachment and sale as directed under C14,mse (iii) above; Defendant No. 1 Company, Defendant No. 2 and 3 are injuncted from dealing with the assets described in Exh "13" and Exh "32" as also assets declared on oath as per Clause (vi) above in any manner whatsoever till the complete recovery of Decreed Amount under Clause (ii) above;

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

(x) Copies of final order be sent to all concerned free of cost and File be consigned to records. S Asokr Presidi g Officer, Debts RecjAery TribuA III, mbai.

(ix) Parties are directed to appear before the Recovery Officer, Debts Recovery Tribunal - III, Mumbai; (Pronounced in open Court) Dated : 9th October 2019