IDBI BANK vs MAHESH KUMAR S on 9 October 2017

FINAL ORDER

The applicant bank has filed Original Application [OA] under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.11,88,151.03 (Rupees Eleven lakhs eighty eight thousand one hundred fifty one and paise three only) together with pendent lite and future interest @15.25% per annum with monthly rests and additional interest @2% with monthly rests from 01.05.2013 till the date of realization and by sale of the OA ‘A’ schedule property. BRIEF FACTS OF THE CASE

1. The applicant is a banking company constituted under the Banking Regulation Act, 1949 having its Registered office at IDBI

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Tower, WTC Complex, Cuffe Parade, Mumbai-400 005 and having one of its branch offices amongst other places at Vazhuthacaud, Trivandrum. The Assistant General Manager is duly authorized to sign and verify this application and represent the bank in these proceedings by virtue of power of attorney executed in his favour.

2. The applicant submits that the application is filed on 30.05.2013 and is within the limitation prescribed under section 24 of the RDDBFI Act, 1993 r/w Sec.13[10] of the Securitization and Reconstruction of financial Assets and Enforcement of Security Interest Act, 2002, as the loan agreement for cash credit facility and other security documents were executed on 30.07.2010. The applicant recalled the loan and issued notices dated 10.09.2012 and on 07.02.2013 through its lawyer calling upon the defendant to pay the amount. Hence the application is within the period of limitation. The claim of the applicant bank in the OA is for recovery of an amount of Rs.11,88,151.03 together with future interest from 01.05.2013 which is above Rs.10 lakhs, hence the Tribunal has the pecuniary jurisdiction to adjudicate the OA.

3. It is stated by the applicant that the defendant is the sole proprietor of M/s. Signature Media House. The defendant approached the applicant for financial assistance for meeting the working capital expenditure of the property concern. Accordingly, applicant has sanctioned a cash credit facility of Rs.10,00,000/- vide sanction letter dated 24.07.2010. The said sanction and agreements were modified by another letter of intent dated 17.09.2011. For the aforesaid credit

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facility, the defendant has executed a hypothecation agreement dated 30.07.2010, whereby defendant has hypothecated first charge of the whole of the movable properties of the concern including its movable plant and machinery, machinery spares, tools and accessories and movables both present and future which are more specifically described in OA ‘A’ schedule. The defendant also executed an irrevocable and unconditional guarantee on 30.07.2010 in favour of the applicant guaranteeing due repayment of the loan granted to the defendant together with interest, liquidated damage and other monies in accordance with the loan agreement. Further the defendant had executed an irrevocable letter of undertaking dated 30.07.2010 agreeing and undertaking not to alienate, transfer dispose of, encumber, hypothecate or mortgage any of the defendant’s properties and assets without the prior approval in writing of applicant and also undertaking to indemnify the applicant against all losses, claims etc suffered on account of any breach of covenants etc. and the same would remain in force till the repayment of the loan.

4. It is stated by applicant that in addition to the above, the defendant executed a demand promissory note dated 30.07.2010, security delivery letter to demand promissory note dated 30.07.2010 and a certificate from Advocate stating that the loan documents mentioned therein were adequately stamped and duly executed and were in order and executed an undertaking dated 30.07.2010.

5. On 17.09.2011, the applicant at the request of the defendant issued another letter of intent that the applicant was

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agreeable to renew the working capital facility on the terms and condition contained in the term of said letter which is an integral part of the loan cum hypothecation agreement dated 30.07.2010. The defendant has executed a balance confirmation statement on 11.04.2012 confirming the correctness of balance amount outstanding in the loan account as on 31.03.2012.

6. As the defendant was not regular in repayment of loan despite the undertaking made by him and neglect to make payment, therefore the applicant issued a recall notice dated 10.09.2012 calling upon him to clear the dues immediately on receipt of notice. As the defendants did not care to repay the amount due even after the receipt of notice, applicant was constrained to issue lawyer notice dated 07.02.2013 calling upon the defendant to pay the arrears within 15 days of receipt of notice. Nonetheless, the defendant has not taken any steps to settle the dues. It is stated by the applicant that a sum of Rs.7,500/- along with interest and other charges is remaining due and payable as on 08.05.2013 on account of expenses incurred by the applicant bank on behalf of the borrower to pay annual service charges to Credit Guarantee Trust. As per the statement of account maintained with the applicant bank, an amount of Rs.11,88,151.03 is due from the defendant 30.04.2013.

7. After filing of the OA, the applicant has taken out summons on defendant as directed by the Tribunal and filed proof of service on 10.09.2013. The summons issued to the defendant was duly served him and service of summons was completed as per the regulations. On

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15.11.2013, the defendant has filed his Vakalath. Though Vakalath is filed by defendant and duly represented through his counsel he has failed to file written statement as directed by the Tribunal.

8. The evidence on the side of the applicant bank consists of the proof affidavit of its Assistant General Manager, AW1 and Exhibits A1 to A14 are marked on the side of applicant and closed their side of evidence.

9. 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:-

10. The evidence on the side of the applicant bank by way of proof affidavit of its Assistant General Manager AW1, reiterates the facts pleaded in the OA and the affidavit is corroborated by the above referred Exhibits A1 to A14 which clearly establishes the case of the applicant bank to allow the present OA. The case of the applicant bank regarding recovery of the sum of Rs.11,88,151.03 claimed as due under

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the cash credit account as on 30.04.2013 with further interest on the sum of Rs.11,60,161.03 (after deducting the penal interest portion – Rs.27,990/-) at the contractual rate @13.25% per annum with monthly rests plus penal interest @2% per annum from 01.05.2013 to 29.05.2013 together with interest pendente lite and post decree interest from the defendant and by sale of ‘A’ schedule property is also proved by the proof affidavit of AW1 and Exts.A1 to A14. Added to this, the non-filing of written statement by defendant in spite of filing Vakalath appears to be intentional without any bonafide reasons and it appears that he remained absent as he admitted the entire case of the applicant as sought for in the present OA.

11. In view of the above the present OA is to be allowed with costs as sought by the applicant bank. 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:-

O R D E R

(a) The OA is allowed with costs;

(b) The defendant is directed to pay a sum of Rs.11,88,151.03 (Rupees Eleven lakhs eighty eight thousand one hundred fifty one and paise three only) with further interest on the sum of Rs.11,60,161.03 (Rupees Eleven lakhs sixty thousand one hundred sixty one and paise three only) @13.25% per annum with monthly rests plus penal interest

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@2% per annum from 01.05.2013 to 29.05.2013 and thereafter @13.25% per annum with monthly rests from 30.05.2013 till the date of realization;

(c) In the event of failure of the defendant to pay the OA claim amount, the bank is at liberty to sell the OA ‘A’ schedule property 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 OA ‘A’ schedule property referred above, the bank is at liberty to proceed against the person and other properties of the defendant, as required under law; (e) Schedule ‘A’ property 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.

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 PS, transcribed by her, corrected by me and then pronounced in the open court on this the 09th day of October, 2017]

(S.V.GOWRAMMA)

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A P P E N D I X Witness for Applicant: AW1: Sreejith.S, Assistant General Manager of the applicant bank.

Witness for Defendant(s): Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents

A1. 27.02.2010 Certified copy of the power of attorney executed by applicant bank in favour of Sreejith.S A2. 24.07.2010 Sanction letter issued by the applicant bank to the defendant. A3. 30.07.2010 Loan cum Hypothecation agreement executed by defendant in favour of the applicant. A4. 30.07.2010 Guarantee Agreement executed by defendant in favour of the applicant. A5. 30.07.2010 Irrevocable letter of undertaking executed by defendant in favour of the applicant. A6. 30.07.2010 Demand Promissory Note for Rs.10,00,000/- (Rupees Ten Lakhs only) executed by defendant in favour of the applicant. A7. 30.07.2010 Take Delivery Letter to DPN executed by the defendant in favour of the applicant. A8. 13.08.2010 Certificate of Advocate stating that the loan documents mentioned therein were adequately stamped and duly executed and were in order. A9. 30.07.2010 Letter of undertaking executed by the defendant in favour of the applicant. A10. 17.09.2011 Duplicate of letter issued by the applicant, acknowledged by the defendant. A11. 11.04.2012 Balance confirmation letter executed by the defendant in favour of the applicant. A12. 10.09.2012 Office copy of the notice issued by the applicant to the defendant. A13. 07.02.2013 Office copy of the lawyer notice issued to the defendant. A14.

Certified copy of statement of accounts pertaining to the cash credit loan account No.046655100000116 in the name of M/s.

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Signature Media House and duly certified under Bankers’ Books Evidence Act,1891.

Defendant’s Exhibits – Nil

(PRESIDING OFFICER)

TA.No.435/2016 (OA.No.292/2013)

TA.No.435/2016 (OA.No.292/2013)

[PRESIDING OFFICER]

VY IN THE DEBTS RECOVERY TRIBUNAL-II, KERALA AT ERNAKULAM

Dated this the 09th day of October, 2017

Present: S.V.Gowramma, B.A., LL.B Presiding Officer TA.No.435/2016 (OA.No.292/2013) Between IDBI Bank Ltd.

…Applicant And Mahesh Kumar.S …Defendant

FINAL ORDER

VY