STATE BANK OF INDIA vs M. MANIKUTTAN on 8 January 2018

FINAL ORDER

The Original Application has been filed under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.4,27,641.01 as due to the applicant from the defendant as on 31.03.2014 with respect to the cash credit facility together with interest at the rate of 14.75% per annum with monthly rests from 01.04.2014 till the date of realization and a sum of Rs.13,28,939.60 is due to the applicant from the defendant as on 31.03.2014 with respect to the term loan account together with interest at the rate of 15.25% per annum with monthly rests from 01.04.2014 till the date of realization and for other connected reliefs.

BRIEF FACTS OF THE CASE

The applicant is a body corporate constituted under the provisions of the State Bank of India Act, 1955 with corporate centre at Mumbai carrying on banking business and having branches/office throughout India including the Stressed Assets Recovery Branch at Thiruvananthapuram. The applicant bank is represented by the Chief Manager of the Stressed Assets Recovery Branch at Thiruvananthapuram who is entitled to verify and sign the application and represent the applicant bank in original application.

It is the case of the applicant that defendant was running manufacturing unit under the name and style of M/s.Power Tech Systems approached the office of Retail Assets Small Enterprises Credit Center (RASECC) at Thiruvananthapuram of the applicant bank for availing credit facilities by filing the application dated 23.12.2005. Accordingly, the applicant bank sanctioned a total credit limit of Rs.6,78,000/- consisting of Rs.1,81,000/- under cash credit facility and term loan to the extent of Rs.4,97,000/- in term of the letter of arrangement dated 09.01.2006. As per the terms and conditions letter of arrangement dated 09.01.2006, the defendant agreed to repay the term loan amount in 78 installments of Rs.8,450/- each.

As a security for the credit facility the defendant had executed the agreement of loan cum hypothecation dated 09.01.2016. The defendant also created a charge/hypothecation of electronic generator, electronic equipments, grinders, lathe, compressor, power press, drilling machine, cutting machine, welding machine in favour of the applicant bank.

The defendant executed a revival letter dated 31.12.2008 and 01.12.2011 with respect to the credit facilities availed by him. It is the case of the applicant that defendants initially paid monthly installments and the cash credit facility account was regularly operated, later the defendant defaulted the payments resulting in irregularity in the account and the periodic stock statements were also not submitted as agreed. The applicant bank several times contracted the defendant and requested him to remit the monthly installments towards the term loan account and to operate the cash credit account regularly, but the defendant did not do so. Therefore the applicant bank caused to issue the lawyer notice dated 15.09.2009 to the defendant directing him to remit the amount due to the applicant bank.

5. As per the statement of account maintained by the applicant bank, a sum of 4,27,641.01 is due as on 31.03.2014 from the defendant with respect to the cash credit facility and a sum of Rs.13,28,939.60 is due as on 31.03.2014 from the defendant with respect to the term loan. It is stated by the applicant that no penal interest has been charged in the both accounts.

6. The applicant bank has taken out the summons as directed by the Tribunal and has filed the proof of service on 17.07.2014. The summons issued to the defendant was served on them and the defendant has filed vakalath on 23.06.2016. Though Vakalath is filed by defendant he did not file written statement within the time stipulated and as directed by the Tribunal. Hence defendant is placed exparte on 23.08.2016.

7. The evidence on the side of the applicant bank consists of the proof affidavit of its Chief Manager, AW1 and Exhibits A1 to A10 is marked on the side of applicant and closed their side of evidence.

8. 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:-

9. The evidence of the applicant bank by way of proof affidavit of Chief Manager AW1 reiterates the facts pleaded in the OA and the affidavit is corroborated by the above referred Exhibits A1 to A10 which clearly establishes the case of the applicant bank to allow the present OA. Added to this, the non-filing of written statement by defendant inspite of filing Vakalath appears to be intentional without any bonafide reasons and it appears that he admitted the entire case of the applicant as sought for in the present OA.

10. 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 interest pendente-lite and post-decree interest @14.75% per annum with monthly rests from 01.04.2014 to 29.05.2014 at the contractual rate and thereafter @ 11.75% per annum on the cash credit account and @ 15.25% per annum with monthly rests from 01.04.2014 to 29.05.2014 at the contractual rate and thereafter @ 9% per annum on the term loan account. Accordingly the applicant bank is entitled to get a final order on the following lines:-

O R D E R

11. The OA is allowed with costs.

(a) The defendant is directed to pay a sum of Rs.4,27,641.01 [Rupees Four lakhs twenty seven thousand six hundred forty one and paise one only] together with future interest @ 14.75% per annum with monthly rests from 01.04.2014 to 29.05.2014 and thereafter @ 11.75% per annum with monthly rests from 30.05.2014 till the date of payment; (b) The defendant is directed to pay a sum of Rs.13,28,939.60 [Rupees Thirteen lakhs twenty eight thousand nine hundred thirty nine and paise sixty only] together with future interest @ 15.25% per annum with monthly rests from 01.04.2014 to 29.05.2014 and thereafter @ 9% per annum with with monthly rests from 30.05.2014 till the date of payment;

(c) In the event of failure of the defendant to pay the aforesaid amounts, the bank is at liberty to sell the OA

schedule property and the sale proceeds be appropriated towards the claim amount as required under law; (d) In the event of non-realization of the OA claim amount despite the sale of the OA schedule property, the bank is at liberty to proceed against the person and properties of the defendant, as required under law; (e) Schedule property shown in the OA shall become part and parcel of the final order 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.

12. 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 her, corrected by me and then pronounced in the open court on this the 8th day of January, 2018]

(S.V.GOWRAMMA) Presiding Officer

A P P E N D I X Witness for Applicant: AW1: M.J.Mathew, Chief Manager of the applicant bank.

Witness for Defendant(s): Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents A1. 30.12.2005 Application for credit facility submitted by the defendant before the applicant bank. A2. 09.01.2006 Letter of arrangement. A3. 09.01.2006 Agreement of loan cum hypothecation executed by the defendant in favour of the applicant bank. A4. 31.12.2008 Revival letter executed by the defendant in favour of the applicant bank. A5. 01.12.2011 Revival letter executed by the defendant in favour of the applicant bank. A6. 15.09.2009 Lawyer notice issued by the applicant to the defendant. A7.

Statement of account pertaining to term loan account. A8.

Statement of unapplied interest pertaining to term loan account. A9.

Statement of account pertaining to cash credit account. A10.

Statement of unapplied interest pertaining to cash credit account.

Defendant’s Exhibits – Nil

(PRESIDING OFFICER)

SCHEDULE

ELECTRONIC GENERATOR

ELECTRONIC EQUIPMENTS

GRINDERS

LATHE

COMPRESSOR

POWER PRESS

DRILLING MACHINE

CUTTING MACHINE

WELDING MACHINE

(PRESIDING OFFICER)

VK

IN THE DEBTS RECOVERY TRIBUNAL-II, KERALA AT ERNAKULAM

Dated this the 8th day of January, 2018

Present: S.V.Gowramma, B.A., LL.B Presiding Officer TA.No.894/2016 (O.A.No.303/2014) Between State Bank of India Stressed Assets Recovery Branch. …Applicant And

M.Manikkuttan

…Defendant

FINAL ORDER