INDIAN OVERSEAS BANK vs K. SUNIL KUMAR on 20 October 2018

FINAL ORDER

This Original Application is filed on 30.03.2015 under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.1,53,46,929/- (Rupees One crore fifty three lakhs forty six thousand nine hundred and twenty nine only) from the defendants jointly and severally with future interest thereon @ 15.50% per annum with half yearly rests on Rs.10,24,201/-; @ 15.75% per annum with monthly rests on

Rs.84,72,919/-; @ 15% per annum with monthly rests on Rs.55,67,178/-; @ 13.71% per annum with monthly rest on Rs.2,82,631/- with effect from 14.03.2015 till realization and by sale of OA ‘A’ & B 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 Karuvannur, Thrissur District. The 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 facilities on 02.09.2011, 15.09.2011, 24.10.2011, 30.08.2012 and 12.12.2012. The defendants created equitable mortgage by deposit of title deeds on 27.08.2011 and confirmed the creation of supplemental mortgage on 15.08.2012. The defendants acknowledged the liability vide revival letter dated 28.06.2014. Hence the OA is within the period of limitation.

3. The 1st defendant is carrying business of cattle feed etc in the name and style “M/s.Sree Guruvayoorappan Thottam” and “M/s.Guruvayoorappan Thottam Cattle Feed Unit. The 2nd defendant is the brother of the 1st defendant.

4. The defendants approached the applicant in July 2011, seeking to avail credit facilities for business purpose of the proprietary concern of the 1st defendant “M/s.Sree Guruvayoorappan Thottam”. At the request of the defendants, applicant on 29.08.2011 sanctioned the (a) Cash Credit facility (for working Capital) of Rs.7,50,000/-, (b) Term Loan facility (dairy loan) of Rs.68,00,000/- and (c) Term Loan facility (farm development, minor irrigation) of Rs. 10,00,000/-.

5. The cash credit facility of Rs.7,50,000/- was secured by the 1st Defendant who is the proprietor of M/s.Sree Guruvayoorappan Thottam and the 1st defendant executed Demand Promissory note dated 02.09.2011 promising to pay to the applicant a sum of Rs.7,50,000/- with interest thereon and agreed that the said DPN shall be the security for the repayment of all sums remaining unpaid on any credit facility availed by the 1st defendant. The said loan was also secured by letter of hypothecation (agricultural advances) dated 02.09.2011 executed by the 1st defendant as proprietor of the said M/s.Sree Guruvayoorappan Thottam hypothecating present and future crops including standing crops etc. which is more fully described under item No.(i) to the OA ‘A’ schedule.

6. The Term Loan credit facility of Rs.68,00,000/- was secured by the 1st defendant as the proprietor of M/s.Sree Guruvayoorappan Thottam and the 1st defendant executed Demand Promissory note dated 15.09.2011 promising to pay to the applicant a sum of Rs.68,00,000/- with interest thereon and agreed to repay the term loan in 57 equal monthly instalments of Rs.1,63,126/-. The said loan was also secured by letter of hypothecation (agricultural advances) dated 15.09.2011 executed by the 1st defendant as proprietor of the said M/s.Sree Guruvayoorappan Thottam hypothecating milch cattle, dairy equipment, machineries, cattle feed etc. which is more fully described under item No.(ii) to the OA ‘A’ schedule.

7. The Term Loan credit facility of Rs.10,00,000/- was secured by the 1st Defendant as the proprietor of M/s.Sree Guruvayoorappan Thottam and the 1st defendant executed Demand Promissory note dated 24.10.2011 promising to pay to the applicant a sum of Rs.10,00,000/- with interest thereon and agreed to repay the term loan in 57 equal monthly instalments of Rs.23,989/-. The said loan was also secured by letter of hypothecation (agricultural advances) dated 24.10.2011 executed by the 1st defendant as proprietor of the said M/s.Sree Guruvayoorappan Thottam hypothecating machinery, equipment and crops which is more fully described under item Nos.(i) & (ii) to the OA ‘A’ schedule.

8. The above credit facilities were guaranteed by continuing personal guarantee of the 2nd defendant who executed letter of guarantee dated 24.10.2011 guaranteeing the repayment of amounts availed by the 1st defendant in respect of the credit facilities aggregating Rs.85,50,000/- of the proprietary concern M/s.Sree Guruvayoorappan Thottam. The credit facilities were further secured by the creation of equitable mortgage by deposit of title deeds in respect of property having an extent of (a) 14.31 acres of land in S.F.No.268, Sankarama Nallur South Village, Madathukulam, Taluk, Tiruppur District obtained by the 1st defendant under Sale Deed

No.3844/2009, Kaniyur SRO and (b) for an extent of 7.36 acres of land in S.F.No 266, Sankarama Nallur South Village, Madathukulam Taluk, Tiruppur District owned by the 2nd defendant under Sale Deed No.3843/2009, Kaniyur SRO, which are more fully described in the ‘B’ schedule to the OA. The 1st and 2nd defendants had also executed and registered memorandum of deposit of title deeds on 29.8.2011.

9. The defendants again approached the applicant in March 2012 seeking for cash credit facility for working capital purpose of M/s.Sree Guruvayoorappan Thottam Cattle Feed Unit. Accordingly, the applicant on 30.08.2012 sanctioned cash credit facility of Rs.50,00,000/-. The 1st defendant as proprietor of the said M/s.Sree Guruvayoorappan Thottam Cattle Feed Unit executed Demand Promissory Note dated 30.08.2012 promising to repay the applicant a sum of Rs.50,00,000/- with interest thereon for the repayment of all credit facility availed by him. Further by a letter of hypothecation dated 30.08.2012, the defendant hypothecated raw materials/work in progress/finished goods and book debts stores in the premises of the 1st defendant at Sankaranallur Village which is more fully described under item No.(iii) to the OA ‘A’ schedule. The said cash credit facility was also secured by the execution of personal continuing guarantee dated 30.08.2012 by the 2nd defendant agreeing to repay the amounts borrowed, in the event of default by the 1st defendant.

10. The applicant bank at the request of the 1st defendant sanctioned a vehicle loan of Rs.3,86,485/- vide credit sanction advice dated 12.12.2012 for which the 1st defendant executed a Demand Promissory Note of Rs.3,86,485/- on 12.12.2012 promising to pay the said amount with interest thereon in 60 equal instalments of Rs. 8,646/- commencing from March, 2013. The said loan was also secured by the hypothecation of the Vehicle (Mahindra Bolero Maxi Truck STD BS3 bearing registration No. KL-08 AZ-4987) in favour of the applicant bank which is more fully described under item No.(iv) to the OA ‘A’ schedule

11. The defendants acknowledged their liability under cash credit facility and term loan facility vide revival letters dated 28.06.2014. 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. Inspite of repeated requests, no sincere efforts are shown by the defendants to settle the dues to the bank. Therefore, the applicant issued lawyer notice dated 24.07.2014 to the defendants demanding that the amounts be paid and the liability be cleared. The notice was received by the 1st defendant and was returned unclaimed by the 2nd defendant, however, the defendants have not cleared the liability. The facilities availed by the 1st defendant and his proprietary concern M/s.Sree Guruvayoorappan Thottam had become NPA on 01.07.2014. The facilities availed by the 1st defendant and his proprietary concern M/s.Sree Guruvayoorappan Thottam Cattle Feed Unit had become NPA on 28.09.2014. As per the statement of accounts maintained by the applicant bank an amount of Rs.1,53,46,929/- is due under the loan accounts of the defendants. Hence, the applicant was 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 and had filed Vakalath on 29.07.2015. Thereafter on 02.9.2015 and 23.09.2015 defendants appeared though their counsel and sought time to file written statement, but they failed to file written statement and subsequently they were absent to the proceedings. Hence, the defendants were set exparte on 23.05.2017.

13. The evidence on the side of the applicant bank consists of the proof affidavit of its Manager and Principal Officer, AW1 and Exhibits A1 to A38 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 the Manager and Principal Officer AW1 reiterates the facts pleaded in the OA and the affidavit is corroborated by the above referred Exhibits A1 to A38 which clearly establishes the case of the

applicant bank to allow the present OA. Added to this, inspite of filing Vakalath and appearance through their counsel on 02.09.2015, 23.09.2015 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. The applicant bank is allowed to recover:

(b) a sum of Rs.1,53,46,929/- (Rupees One crore fifty three lakhs forty six thousand nine hundred and twenty nine only) with future interest thereon @ 15.50% per annum with half yearly rests on Rs.10,24,201/- [Rupees Ten lakhs twenty four thousand two hundred and one only]; @ 15.75% per annum with monthly rests on Rs.84,72,919/- [Rupees Eighty four lakhs seventy two thousand nine hundred and nineteen only]; @ 15% per annum with monthly rests on Rs.55,67,178/- [Rupees Fifty five lakhs sixty seven thousand one hundred and seventy eight only]; @ 13.71% per annum with monthly rests on Rs.2,82,631/- [Rupees Two lakhs eighty two thousand six hundred and thirty one only] from 14.03.2015 till realization and also its costs from the defendants jointly and severally.

(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’ and ‘B’ 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’ & ‘B’ 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 20th day of October, 2018]

(S.V.GOWRAMMA)

A P P E N D I X Witness for Applicant:

AW1: C.Mohana Kumari.C, Manager and Principal Officer of the applicant bank.

Witness for Defendants: Nil

Exhibits on the part of the applicant

Ext.No. Particulars of documents

A1. Credit Sanction Advice dated 29.08.2011. A1(a) Credit Sanction Advice dated 15.09.2011. A1(b) Credit Sanction Advice dated 02.09.2011. A2. Demand promissory note dated 02.09.2011 executed by the 1st defendant. A3. Letter dated 02.09.2011 executed by the 1st defendant. A4. Letter of hypothecation dated 02.09.2011 executed by the 1st defendant. A5. Demand promissory note dated 15.09.2011 executed by the 1st defendant. A6. Request letter executed by the defendants dated 15.09.2011. A7. Letter of hypothecation dated 15.09.2011 executed by the 1st defendant. A8. Letter executed by the 1st defendant dated 15.09.2011. A9. Demand promissory note dated 24.10.2011 executed by the 1st defendant. A10. Request letter executed by the defendants dated 24.10.2011. A11. Letter dated 24.10.2011. A12. Letter of hypothecation dated 24.10.2011 executed by the 1st defendant. A13. Letter of personal continuing guarantee executed by 2nd defendant dated 24.10.2011. A14. Sale Deed No.3844/2009, Kaniyur SRO. A14(a) Sale Deed No.3843/2009, Kaniyur SRO. A15. Confirmation letter executed by the 1st defendant dated 27.08.2011.

A16. Confirmation letter executed by the 2nd defendant dated 28.08.2011. A17. Memorandum of deposit of title deed dated 29.08.2011 A18. Credit sanction advice dated 30.08.2012. A19. Demand promissory note dated 30.08.2012 executed by the 1st defendant. A20. Demand promissory note was handed over along with letter dated 30.08.2012 executed by the 1st defendant. A21. Letter of hypothecation dated 30.08.2012 executed by the 1st defendant. A22. Personal continuing guarantee dated 30.08.2012. A23. Confirmation letter for supplemental mortgage executed by 1st defendant dated 27.08.2012. A24. Confirmation letter for supplemental mortgage executed by 2nd defendant dated 15.08.2012. A25. Credit sanction advice dated 12.12.2012. A26. Demand promissory note dated 12.12.2012 executed by the 1st defendant. A27. Letter dated 12.12.2012 executed by the 1st defendant. A28. Deed of hypothecation dated 12.12.2012 executed by the 1st defendant. A29. Registration certificate of vehicle. A30. Letter executed by the 1st defendant dated 12.12.2012. A31. Revival letter dated 28.06.2014 executed by the 1st defendant. A32. Revival letter dated 28.06.2014 executed by the 2nd defendant. A33. Office copy of legal notice dated 24.07.2014. A33(a) Acknowledgment card and postal receipt of the letter dated 24.07.2014. A33(b) Returned lawyer notice dated 24.07.2014. A34. Computerized statement of account in respect of the Cash Credit facility (A/c.No.022102000000159) for the period from 01.01.2011 to 13.03.2015. A35. Computerized statement of account in respect of the term loan facility (A/c.No.022103681100004) for the period from 01.01.2011 to 13.03.2015. A36. Computerized statement of account in respect of the term loan facility (A/c.No.022103631100001) for the period from 01.01.2011 to 13.03.2015. A37. Computerized statement of account in respect of the Cash Credit facility (A/c.No.022102000000283) for the period from 01.01.2011 to 13.03.2015.

A38. Computerized statement of account in respect of the vehicle loan facility (A/c.No.022103551200028) for the period from 01.01.2011 to 13.03.2015.

Defendants Exhibits – Nil

(PRESIDING OFFICER)

(PRESIDING OFFICER)

IN DEBTS RECOVERY TRIBUNAL-II, KERALA AT ERNAKULAM

Dated this the 20th day of October, 2018

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

T.A.No.105/2016 (OA.No.178/2015) Between Indian Overseas Bank, Karuvannur Branch.

…Applicant And K.Sunil Kumar & another

…Defendants

FINAL ORDER

SA.No.404 /2018. (DRT-1)

Counsel for the applicant is present. Applicant has filed the present SA aggrieved by Annexure XII sale notice dated nil issued by the respondent bank. Along with the SA, applicant has filed IA.2352/2018 a petition to stay all further proceedings pursuant to the notice purported to be a notice under Rule 6(2) of the Act pending disposal of the SA.

2. It is submitted by the applicant, that the applicant is engaged in the business of running tax having office in the building which house the cantonment branch of the 1st respondent bank. The applicant had availed a car loan of Rs.7,04,000/- and the transaction between the applicant and 1st respondent bank was running smooth till an untoward incident which took place in between the staff of the bank and the applicant’s employee and the applicant.

3. It is averred that the applicant is highly aggrieved by the misbehavior meted out against him by the respondent bank, hence gave Annexure-I letter/complaint to the Regional Manager of the 1st respondent bank. The Regional Manager of the 1st respondent bank had issued Annexure-II letter dated 24.03.2017 in reply to Annexure I. As a counter blast to Annexure I complaint, the respondents classified the account as NPA and initiated proceeding under the Act without giving an opportunity to be heard by the applicant.

4. It is further contended that the respondent bank has obtained favorable order from the Ld. Chief Judicial Magistrate to sell the movable property ie. Toyota Etios GD (MS), bearing Reg.No.KL-13- AE/414. It is the further case of the applicant that as on 28.06.2018, there is only an outstanding of Rs.4,12,421/- and applicant is ready to make some payment to defer the sale of moveable property.

5. Heard the submission of applicant’s counsel on the I.A 2352/2018 and perused the records. Recording the submission of the Ld counsel for applicant and applicant willingness to make some payment to show his bonofides, the Tribunal without going into the merits of the case and on the principle of natural justice, feels an opportunity be granted. Accordingly, IA.No.2352/2018 is disposed of on the following terms: -

1. The applicant is hereby directed to make a payment Rs.1,00,000/- (Rupees One Lakhs only) on or before 22.10.2018. On receipt of the said payment, the respondent bank is directed to defer further proceeding pursuant to Annexure –XII sale notice.

2. In case, if the applicant fails to comply with the direction to pay the amount of Rs.1,00,000/- on or before 22.10.2018, the respondent bank is at liberty to proceed further with the Annexure –XII sale notice without any further order from the Tribunal in accordance with law.

6. Applicant is hereby directed to take out notice on respondents along with copy of SA/IA and all its annexures on the respondents by RPAD and file proof of service. List the matter on 22.10.2018 for report of compliance and for appearance of respondent bank.

S.V.Gowramma.

[In charge]