INDIAN OVERSEAS BANK vs M/s ASK ENTERPRISES on 16 July 2018

FINAL ORDER

This Original Application is filed on 18.05.2015 under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.83,26,308.53 from the defendants with future interest thereon @ 14.75% per annum with monthly rests from 16.05.2015 till realization and by sale of OA ‘A’ schedule properties. BRIEF FACTS OF THE CASE

1. The applicant is a Nationalized Bank constituted under the Banking Companies (Acquisition of Transfer of Undertaking Act-Act 5

of 1970) having its Central office at 763, Anna Salai, Chennai-6000 002 with Regional Offices and branches at various places in India including a branch at Pandalam, Pathanamthitta District. The Senior Manager and Principal Officer is competent to verify and authorized to sign the pleadings and take all legal actions representing the applicant bank.

2. The applicant declares that the application is presented within the period limitation prescribed under Section 24 of the RDDBFI Act 1993, as the defendant had executed security document and availed credit facility on 17.09.2012. Hence, the application is within the period of limitation.

3. It is the case of the applicant that the 1st defendant is the proprietary concern of 2nd defendant engaged in the business of hiring/leasing of construction equipment and machineries with vehicle. The defendants approached the applicant in August 2012, requesting to avail financial facilities for purchase of machineries, equipments and vehicle. Considering the request applicant sanctioned a term loan of Rs.65,76,000/- vide credit sanction advice dated 13.09.2012.

4. As a security to the credit facility 1st defendant represented by 2nd defendant had executed a demand promissory note dated 17.09.2012 promising to pay the applicant a sum of Rs.65,76,000/- with interest thereon. The defendants had also executed a term loan agreement dated 17.09.2012 in favour of the applicant agreeing to abide the term and conditions of sanction and promised to repay the amount of loan in 78 equal monthly installments of Rs.1,25,315, the first installment due on 30.04.2013 and the remaining before the last date of each successive month. The said term loan was further secured by hypothecation of concrete mixers, vibrators, props, side folding sheet, corrugated sheets, GIB, GIH and GIC sheet etc. used of construction works, lying at the premises of the 1st defendant which are more specifically described under ‘A’ [i] schedule to the OA vide letter of hypothecation dated 17.09.2012

5. In addition to the above, the defendants had also executed a letters dated 17.09.2012, agreeing to repay the loan in 78 equal monthly installments of Rs.1,25,315 each and applicant’s option discretion to recall the entire loan amount or any part thereof and to enforce the security in the event of default in complying with the terms and conditions of the facility. Further, defendants had given consent/authorization to the applicant to recovery the amounts through revenue recovery proceedings in case of any defaults.

6. It is submitted that the defendants on 21.08.2012 requested for a term loan for purchase of Vehicle. The applicant vide sanction advice dated 09.09.2012 sanctioned a term loan facility of Rs.2,88,000/- for purchase of Mahindra Maximo Vehicle and agreed to repay the loan in 78 equal monthly installments of Rs.5,448, the first of such installments was to commence from April, 2013 Further as security for the said facility defendants have executed a promissory note dated 17.09.2012 promising to pay the applicant a sum of Rs.2,88,000/- with interest thereon. The defendants have also executed a deed of hypothecation dated 17.09.2012 hypothecating the vehicle purchased with the financial assistance availed in favour of the applicant which is more fully described in the ‘A’ [ii] schedule to the OA.

7. In addition to the above, defendants have executed a letter of undertaking dated 17.09.2012 agreeing consenting the applicant’s discretion to recall the entire loan amount or any part thereof and to enforce the security in the event of the defendants defaulting in complying with the terms and conditions of the facility. The defendants vide letter dated 17.09.2012 gave consent/authorization to the applicant to recovery the amount through revenue recovery proceedings in case of any default in repayment.

8. It is submitted that n 21.08.2012 the defendants again approached the applicant with a request to purchase a lorry and at the request of the defendants the applicant had sanctioned a term loan facility of Rs.6,36,000/- vide sanction advice dated 13.09.2012 for the purchase of Mahindra Road Lorry and agreed to repay the loan in 78 equal monthly installments of Rs.12,120, the first of such installments was to commence from 30.04.2013 and also executed a request letter dated 17.09.2012 to that effect.

9. The defendants have executed a promissory note dated 17.09.2012 promising to pay the applicant a sum of Rs.6,36,000/- with interest thereon and also executed a deed of hypothecation dated 17.09.2012 hypothecating the vehicle purchased with the financial assistance availed in favour of the applicant which is more fully described in the ‘A’ [iii] schedule to the OA.

10. In addition to the above, defendants have executed a letter of undertaking dated 17.09.2012 agreeing to the applicant’s discretion to recall the entire loan amount or any part thereof and to enforce the security in the event of the defendants defaulting in complying with the terms and conditions of the facility. The defendants vide letter dated 17.09.2012 given consent/authorization to the applicant to recovery the amount through revenue recovery proceedings in case of any default in repayment.

11. It is the contention of the applicant that despite the undertaking made by the defendants, they failed to make repayment as per the terms of the sanction. The accounts were irregular, hence the loan accounts become NPA on 01.04.2014. Though the applicant had assured to clear the entire liability vide letter dated 02.08.2014, defendants did not clear the liability. Therefore, the applicant issued lawyer notice dated 04.09.2014 demanding the defendants to pay of the entire outstanding amount due under the loan accounts. The defendants vide letter dated 26.09.2014 assured the applicant that the overdue will be cleared, but they failed to do so. As per the statement of account maintained by the applicant bank an amount of Rs.83,26,308.53/- is due under the loan account of the defendants. Hence the applicant constrained to file this OA for the recovery of the entire outstanding amount against the defendants.

12. After filing of the OA, the applicant bank has taken out the summons as directed by the Tribunal. The summons issued to the defendants was duly served on them. The summons issued to the 2nd defendant was returned with an endorsement ‘unclaimed’. Thereafter on 15.07.2015 and 16.09.2015 defendants appeared though their counsel and sought time to file written statement, but they failed to file vakalath and written statement and subsequently they were absent to the proceedings. Hence, the defendants were set exparte on 06.06.2017.

13. The evidence on the side of the applicant bank consists of the proof affidavit of its Senior Manager and Principal Officer, AW1 and Exhibits A1 to A26 is marked on the side of applicant and closed their side of evidence.

14. Heard arguments of the applicant bank and perused the records of the case. The following points arise for my consideration:

(i) Whether the applicant is entitled for the reliefs prayed for in the OA?

(ii) What order?

My findings on the above points are as follows:- Point No.(i):

In the affirmative

Point No.(ii):

As per final order.

Reasons:-

15. The evidence of the applicant bank by way of proof affidavit of Senior Manager and Principal Officer AW1 reiterates the facts pleaded in the OA and the affidavit is corroborated by the above referred Exhibits A1 to A26 which clearly establishes the case of the applicant bank to allow the present OA. Added to this, the absence of defendants inspite of appearance through their counsel on 15.07.2015

and 16.09.2015 and subsequent absence to the proceedings appears to be intentional without any bonafide reasons and it appears that they remained absent as they admitted the entire case of the applicant as sought for in the present OA. In view of the above the present OA is to be allowed with costs as sought by the applicant bank.

16. Having regard to the amount advanced, the interest applied, the conduct and operations in the account and the default committed, I am of the view that the applicant bank is entitled to get a final order on the following lines:-

ORDER

(a) The OA is allowed with costs.

(b) The defendants are liable to pay the applicant bank a sum of Rs.83,26,308.53/- (Rupees Eighty three lakhs twenty six thousand three hundred eight and paise fifty three only) with future interest thereon @12.75% per annum with monthly rests from 16.05.2015 till realization and also its costs from the defendants;

(c) In the event of failure of the defendants to pay the OA claim amount, the bank is at liberty to sell the OA ‘A’[i] to [iii] schedule properties of the defendants and the sale proceeds be appropriated towards the OA claim amount as required under law; (d) In the event of non-realization of the OA claim amount despite the sale of the mortgaged properties referred above, the bank is at liberty to proceed against the other properties of the defendant, as required under law; (e) Schedule ‘A’ [i] to [iii] properties shown in the OA shall become part and parcel of the final order of the OA and Recovery Certificate of present OA; (f) The applicant bank shall file memo of costs within ten days from the date of this final order; (g) Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

17. The Registry is directed to communicate copy of the order to the parties concerned by speed post or registered post with AD. [Dictated to the steno, transcribed by him, corrected by me and then pronounced in the open court on this the 16th day of July, 2018]

(S.V.GOWRAMMA) Presiding Officer

A P P E N D I X

Witness for Applicant: AW1: George Thomas, Senior Manager and Principal Officer of the applicant bank.

Witness for Defendants: Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents

A1. 13.09.2012 Credit sanctions advice issued by the applicant to the 1st defendant. A2. 17.09.2012 Demand promissory note executed by the 1st defendant. A3. 17.09.2012 Term loan agreement executed by the 1st defendant. A4. 17.09.2012 Letter of hypothecation executed by the 1st defendant. A5. 17.09.2012 Request letter executed by the 1st defendant. A6. 17.09.2012 Letter of undertaking executed by the 1st defendant. A7. 17.09.2012 Letter of consent/authorization executed by the 1st defendant in favour applicant. A8. 09.09.2012 Credit sanctions advice issued by the applicant to the 1st defendant. A9. 17.09.2012 Demand promissory note executed by the 1st defendant. A10. 17.09.2012 Deed of hypothecation executed by the 1st defendant. A11.

Registration Certificate given by the defendants showing the hypothecation in favour of the applicant. A12. 17.09.2012 Letter of undertaking executed by the 1st defendant. A13. 17.09.2012 Letter of consent/authorization executed by the 1st defendant in favour applicant. A14. 13.09.2012 Credit sanctions advice issued by the applicant to the 1st defendant. A15. 17.09.2012 Demand promissory note executed by the 1st defendant.

A16. 17.09.2012 Deed of hypothecation executed by the 1st defendant. A17.

Registration Certificate given by the defendants showing the hypothecation in favour of the applicant. A18. 17.09.2012 Request letter executed by the 1st defendant. A19. 17.09.2012 Letter of undertaking executed by the 1st defendant. A20. 17.09.2012 Letter of consent/authorization executed by the 1st defendant in favour applicant. A21. 02.08.2014 Letter issued by the 2nd defendant to the applicant. A22. 04.09.2014 Lawyer notice issued by the applicant to the 2nd defendant. A23. 22.09.2014 Letter issued by the 2nd defendant to the applicant. A24.

Certified copy of the statement of account in respect of the term loan account No.071603261200007 for the period from 17.09.2012 to 15.05.2015. A25.

Certified copy of the statement of account in respect of the term loan account No.071603261200008 for the period from 17.09.2012 to 15.05.2015. A26.

Certified copy of the statement of account in respect of the term loan account No.071603261200009 for the period from 17.09.2012 to 15.05.2015.

Defendants Exhibits – Nil

(PRESIDING OFFICER)

‘A’ SCHEDULE

i) Concrete mixers (4 nos), Needle vibrators (20 nos), props, side folding sheets, GP sheets, corrugated sheets, GIB, GIH and GIC sheet etc, used for construction works and machineries/goods lying loose or fixed in the premises of the defendants at VI/176, Thonnalloor. ii) Vehicle (Mahindra Maxximo STD LC.9L 2CY MHAWK NA BS3-LMV goods carriage), white and H-yellow colour, diesel vehicle, bearing registration No.KL-26-D-903, having Chassis No.MA1FA2HRRC6H23696 and Engine No.HRC6H41727. iii) Vehicle (Load King Pride 6T Long Wheel Base-LMV goods carriage), Red and H-yellow colour, diesel vehicle, bearing registration No.KL-26-D-343, having Chassis No.MESGF2BTDC3F16463 and Engine No.BTC4F18571.

[PRESIDING OFFICER]

IN DEBTS RECOVERY TRIBUNAL-II, KERALA AT ERNAKULAM

Dated this the 16th day of July, 2018

Present: S.V.Gowramma, B.A., LL.B Presiding Officer

Between Indian Overseas Bank Pandalam Branch. …Applicant And M/s.ASK Enterprises & another

…Defendants

FINAL ORDER