CANARA BANK vs ALTA VISTA WOOD FURNISHING on 22 September 2018

FINAL ORDER

This Original Application is filed on 26.04.2016under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.59,91,206.15 (Rupees Fifty Nine Lakhs Ninety one Thousand Two hundred six and paise fifteen only)is due to the applicant from the defendant under the OCC account No.4212261000007, maintained by the defendant with the applicant and that the defendant is liable to pay the said amounts together with future interest compounded quarterly @12.9% per annum from 26.04.2016 till date of realization. BRIEF FACTS OF THE CASE:

1. The applicant is a body corporate duly constituted under the Banking Companies Act 1970, having its head office at 112,J.C Road Bangalore and branch among other places including one at SME Branch, Kollam represented by its Manager who is conversant with the facts of the case and is duly constituted attorney and is authorized to sign and verify the application and do the needful on behalf of the applicant.

2. It is declared by the applicant bank that the over draft cash facility was availed by the defendants on 23.10.2013 and executed necessary loan documents thereof and this application is filed within the three years from the dates when the loan was availed and the OA is within the period of limitation prescribed in Section 24 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

3. It is the case of the applicant that the 1st defendant is a proprietary concern of Saifudeen who is engaged in the business of manufacturing of wooden furniture and the 2nd defendant is also engaged in the business and 3rd defendant is the wife of 2nd defendant and 2nd and 3rd defendants are guarantors to the financial facility availed by the 1st defendant. The 1st defendant approached the applicant bank for an Over draft Cash credit Facility of Rs.50,00,000/- which was sanctioned by the applicant vide Sanction memorandum dated 23.10.2013 to the 1st defendant. The 1st defendant executed a demand promissory note for Rs.50Lakhs, cash credit agreement, a letter of undertaking and a request for overdraft facility in favour of the applicant bank on 23.10.2013.

4. The 2nd and 3rd defendants stood as guarantors to the credit facility availed by the 1st defendant and also executed guarantee covering letter and guarantee agreement dated 23.10.2013 in favour of the applicant bank. The 2nd and 3rd defendants mortgaged the property and deposited the Sale Deed No.556/2010 of Kilikolloor Sub Registry title deeds of the propertystanding in the name of the 2nd and 3rd defendants. having an extent of 3.03 ares in Re.Sy.No.65/13, 65/13/2 of Mangad Village, Kollam Taluk described under Schedule A of the application as security towards the credit facility in favour of the applicant bank and executed a letter evidencing the deposit of title deeds on 22.10.2013.

5. It is submitted by the applicant bank that the 1st defendant, after availing of the credit facility failed to take off the business and therefore failed to repay the amount due to the applicant bank. Despite the repeated requests of the applicant, the 1st defendant did not clear the liability and hence the loan account of the 1st defendant was classified as NPA on 17.04.2015. A registered notice was sent to the defendants on 11.05.2015 recalling the loan account and asking the defendants to clear the entire dues under the OCC account. Despite issuance of the notice, the defendants did not clear the liabilities and hence the applicant issued notice under Section 13(2) of the SARFAESI Act dated 27.05.2015. Pursuant to the issuance of the 13(2) notice the applicant took symbolic possession of the secured asset on 06.08.2015.

6. As per the statement of accounts of the applicant bank, total amount due in the OCC account is Rs.59,91,206.15. As the amount due to applicant has not been paid till date, the applicant has constrained to file this original application for recovery of the said amount. 7 After filing of the OA, the applicant bank has taken out summons as directed by this Tribunal and has filed proof of service on 11.05.2016. The summons issued to the defendants are duly served and service of summons is completed as per the regulations. The 1st defendant have neither appeared before the Tribunal not filed the vakalath. Hence, 1st defendant was placed exparte on 22.03.2017. Defendants 2 and 3 has filed vakalath on 21.10.2016 however they have not filed written statement and there was no appearance for the defendants 2 and 3 and their chance of filing written statement was closed on 22.03.2017.

8. Pending the OA, the applicant has filed an IA 809/2018 a petition to return the Sale Deed No.556/2010 of Kilikolloor Sub Registry in respect of the ‘A’ schedule property to the OA. In the affidavit filed along with the IA, the applicant has submitted that the applicant has put the mortgaged property for auction and the property was sold on 26.03.2018 for an amount of Rs.18,30,000/- and the amount has been received by the applicant bank and hence the title deed of the property was returned to the applicant vide order in IA 809/2018 dated 11.04.2018.

9. The evidence on the side of the applicant bank consists of the proof affidavit of its Senior Manager, AW1 and Exhibits A1 to A18 is marked on the side of applicant and closed their side of evidence

10. 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:-

11. The evidence of the applicant bank by way of proof affidavit of Senior Manager AW1, reiterates the facts pleaded in the OA and the affidavit is corroborated by the above referred Exhibits A1 to A18 which clearly establishes the case of the applicant bank to allow the present OA. Even otherwise the whole case of the applicant bank is based on the documentary evidence and the witness has duly proved all the documents exhibited by him. It is quite evident from the documents placed on record by the applicant bank that defendants have availed the financial assistance from the respondent bank and have failed to repay the dues of the respondent bank. Added to this, it appears that the defendants did not contest the matter as they admitted the entire case of the applicant as sought for in the OA.In view of the above, the present OA is to be allowed with costs as sought by the applicant bank.

12. The records would reveal that the 1st defendant is only a proprietary concern of the 2nd defendant. A proprietary concern is neither a living person nor a juristic person entitled to sue or be sued in its name. Therefore, the applicant bank is not entitled to get any relief against the 1st defendant proprietary concern.

13. Having regard to the amount advanced, the interest applied, the conduct and operations in the account and the default committed, the Tribunal is 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 jointly and severally directed to pay a sum of Rs.59,91,206.15 (Rupees Fifty Nine Lakhs Ninety one Thousand Two hundred six and paise fifteen only) together with future interest compounded quarterly on sum of Rs.58,72,723.15

[Rs.59,91,206.15 – Penal interest of Rs.1,18,483] @12% per annum from 26.04.2016 till realization and also its cost less the sum of Rs.18,30,000/- (Rupees Eighteen Lakhs Thirty Thousand only) recovered by the applicant bank by sale of ‘A’ schedule property on 26.03.2018.

(c) In the event of non-realization of the OA claim amount, the bank is at liberty to proceed against the properties of the defendants, as required under law; (d) The applicant bank shall file memo of costs within ten days from the date of this final order; (e) Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

13. 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 22nd day of September, 2018]

(S.V.GOWRAMMA)

A P P E N D I X

Witness for Applicant: AW1: Mr. Anwer E, Senior Manager and Principal Officer of the applicant bank. Witness for Defendant(s): Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents A1 23.10.2013 Sanction Memorandum of the applicant on grant of the financial facility of Rs.50,00,000/- to the 1st defendant A2 23.10.2013 Demand promissory note executed by the 1st defendant in favour of the applicant A3 23.10.2013 Cash Credit Agreement executed by the 1st defendant in favour of the applicant A4 23.10.2013 Letter of undertaking executed by the 1st defendant in favour of the applicant A5 23.10.2013 Request for overdraft facility executed by the 1st defendant in favour of the applicant bank A6 23.10.2013 Guarantee covering letter executed by the 2nd defendant in favour of the applicant bank A7 23.10.2013 Guarantee agreement executed by the 2nd defendant in favour of the applicant bank A8 23.10.2013 Guarantee covering letter executed by the 3rd defendant in favour of the applicant bank A9 23.10.2013 Guarantee agreement executed by the 3rd defendant in favour of the applicant bank A10 22.10.2013 Letter evidencing deposit of title deeds executed by the 2nd and 3rd defendants A11 - Sale Deed No.556/2010 of Kilikolloor Sub Registry executed by Suharban in favour of 2nd and 3rd defendants A12 11.05.2015 Office copy of the registered notice issued by the applicant to the defendants A13 27.05.2015 Office copy of the notice issued under section 13(2) of the SARFAESI Act A14 06.08.2015 Office copy of the possession notice issued by the applicant A15 - Extract of the Over Draft Cash Credit Account No.4212261000007 of the 1st defendant maintained with the applicant A16 - Statement of account showing unapplied interest and rate of interest charged in the loan account of the 1st defendant A17 30.07.2008 General Power of Attorney issued by the applicant in favour of C.J.Shirly A18 09.09.2006 Attested copy of General Power of Attorney issued by the applicant in favour of Anwar.E

Defendant’s Exhibits – Nil

(PRESIDING OFFICER)

IN THE DEBTS RECOVERY TRIBUNAL-II, KERALA AT ERNAKULAM Dated this the10thday of September, 2018 Present: S.V.Gowramma, B.A., LL.B

T.A No. 617/2016 [OA.No.370/2016] Between

Canara Bank,

Kollam - 691001

…Applicant

And

Alta Vista Wood Furnishing,

& others

…Defendants

FINAL ORDER