UCO BANK vs A.V FRANCIS on 12 June 2017

FINAL ORDER

The applicant bank has filed Original Application [OA] on 02.04.2013 under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.75,11,885/- (Rupees Seventy Five Lakhs Eleven Thousand Eight Hundred Eighty Five Only) together with interest on Rs.73,95,053/- (Rupees Seventy Three Lakhs Ninety Five Thousand Fifty Three only) at the rate of 13.50% per annum from 12.03.2013 with monthly rests from the defendants and their assets under the loan account No.08750500009960, an amount of Rs.10,23,242/- (Rupees Ten Lakhs Twenty Three Thousand Two Hundred Forty Two only) together with interest on Rs.10,05,078/- (Rupees Ten Lakhs Five Thousand Seventy Eighty only) at the rate of 13.50% per annum from 12.03.2013 with monthly rests from the defendants and their assets under the loan account No.08750510000311 and by sale of ‘A’, ‘B’ and ‘C’ schedule properties to the OA. BRIEF FACTS OF THE CASE

1. The applicant is a Banking Company constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 as amended by the Banking Laws (Amendment) Act 1985 having its Registered office at Kolkata and a branch amongst other places at Thrissur District. The applicant is represented by its Senior Manager.

2. The 5th defendant is the partnership firm and Defendants 1 to 4 are partners of M/s.Arakkal Fabrics and the 6th defendant is one of the branch of the 5th defendant. The Defendants 1 to 4 are the partners of the 5th defendant. The Defendants 1 to 4 on behalf of defendants 5 and 6 approached the applicant for sanction of credit facilities. Accordingly, the 5th defendants was granted a cash credit of Rs.55,00,000/- and another cash credit of Rs.7,00,000/- and term loan of Rs. 14,00,000/- were sanctioned to the 6th defendant. Further credit facility of Rs.3,75,000/- and Rs.6,50,000/- were also sanctioned to the defendants 5 and 6. The credit facilities are secured by equitable mortgage of the property described in Sale Deed No.100/1985 and Will No.93/1982 of Mullassery SRO owned and possessed by 1st defendant A.V.Francis favoring the applicant bank.

3. As defendants were highly irregular in repayment applicant issued demand notice demanding an amount of Rs.85,58,523/- plus interest from 01.04.2008 plus costs and expenses. Thereafter applicant had taken possession of the property and put up for sale. Against which defendants approached Hon’ble High Court by filing WP(C) No.38022/2008 and WA.No.112/2009 and Hon’ble High Court granted conditional stay. As defendants failed to comply the direction of the Hon’ble High Court, stay granted by the High Court is vacated automatically and applicant proceeded further and sold the property after dividing the property in 3 parts and two properties viz 8 cents in survey No.192/5 and 8.11 cents of land along two storied building baring No.XI/158 and 159 in Survey No.192/5 of Barhmakulam Village were sold in auction conducted on 08.12.2009. An amount of Rs.39,11,000/- was adjusted to the loan account and Sale Certificate was issued.

4. Later defendants filed an application for renewal of cash credit limit of Rs.55,00,000/- and Rs.7,90,000/- the same was sanctioned vide letters dated 05.04.2010 and 12.03.2010. The up gradation of loan account is secured by hypothecation of goods described under ‘A’ and ‘B’ schedule and equitable mortgage of immovable property described in ‘C’ schedule to the OA with the applicant bank. Agreeing to the terms and conditions of the sanction defendants has executed loan documents.

5. The defendants failed to abide by the terms and conditions under which the loan was sanctioned and there was no regular transaction in the account. The cash credit accounts were classified as NPA as on 30.06.2012 and applicant initiated proceedings under the SARFAESI Act by issuing Section 13(2) demand notice on 16.07.2012 which was duly served on defendants 1 to 6. In the meantime 1st defendant has approached the DRT by filing SA.15/2013. But the defendant has failed to comply with the condition imposed by the Tribunal. Therefore, the applicant proceeded further and filed the present OA for recovery of amount due under the loan accounts of the defendants. During the pendency of OA applicant has issued sale notice and the property having an extent 13.64 cents of land and the two storied residential building in Survey No.192/5 P in Brahmakulam Village in the name of 1st defendant comprised in Sale Deed No.100/1985 dated 16.01.1985 and Will No.93/1982 dated 06.12.1982 of Mullassery SRO described in ‘C’ schedule to the OA sold for a total sale consideration of Rs.57,25,505/-. Out of the sale consideration of Rs.57,25,505/-, Rs.50,00,000/- was adjusted towards cash credit account No.08750500009960 and Rs.7,25,505/- was adjusted towards cash credit account No.08750510000311 and the sale certificate issued in favour of the auction purchaser was registered also.

6. As per the account maintained by the applicant bank in the ordinary course of business, an amount of Rs.35,06,258/- together with interest @ 13.50% per annum from 13.02.2014 was due under cash credit account No.08750500009960 and an amount of Rs.4,33,187/- together with interest @ 13.50% per annum from 13.02.2014 is due under the cash credit account No.08750510000311 from the defendants.

7. After filing of the OA, summons issued to defendants were duly served on them. The defendants neither appeared nor were they represented and they chose to remain absent and hence they were declared ex-parte on 19.09.2014.

8. The evidence on the side of the applicant bank consists of the proof affidavit of its Senior Manager, AW1 and Exhibits A1 to A29 was marked on the side of the applicant.

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 of applicant bank is adduced by its Senior Manager AW1. The affidavit by way of evidence reiterates the facts pleaded in the OA and the affidavit is corroborated by the above referred Exhibits A1 to A29 which clearly establishes the case of the applicant bank to allow the present OA. Added to this, the absence of defendants in spite of service 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 cost as sought by the applicant bank.

O R D E R

(a) The OA stands allowed with costs. The defendants are directed to pay to the applicant bank a sum of Rs.35,06,258/- (Rupees thirty five lakhs six thousand two hundred fifty eight only) due under CC account No.08750500009960 together with interest at the rate of 13.50% per annum with monthly rests from 13.02.2014 till the date of realization; (b) defendants are further directed to pay to the applicant bank a sum of Rs.4,33,187/- (Rupees Four lakhs thirty three thousand one hundred eight seven only) due under CC account No.08750510000311 together with interest at the rate of 13.50% per annum with monthly rests from 13.02.2014 till the date of realization;

(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 person and other properties of the defendants, as required under law.

(e) Schedule ‘A’ and ‘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 seven 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.

11. 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 12th day of June, 2017]

(S.V.GOWRAMMA)

Presiding Officer

A P P E N D I X

Witness for Applicant:

AW1: Abdul Gaffar, Senior Manager of the applicant bank.

Witness for Defendant(s): Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents

A1 05.04.2010 Loan Sanction Letter A2 12.03.2010 Loan Sanction Letter A3 01.10.1998 Partnership Deed between defendants 1 to 4. A4 05.04.2010 Hypothecation of goods A5 12.03.2010 Hypothecation of goods A6

05.04.2010 Demand Promissory Note A7

12.03.2010 Demand Promissory Note A8

05.04.2010 Waiver presentment A9

12.03.2010 Waiver presentment A10 05.04.2010 Letter of continuity A11 12.03.2010 Letter of continuity A12 05.04.2010 Confirmation letter A13 05.04.2010 Personal letter guarantee A14 12.03.2010 Personal letter guarantee A15 02.01.2012 Acknowledgment of debts A16 02.01.2012 Acknowledgement of debts A17 24.08.2005 Draft of letter of deposit of title deeds A18 24.08.2005 Entry in equitable mortgage register (photocopy) A19

Statement of accounts pertaining to account No. 0875050009960 A20

Statement of accounts pertaining to account No. 08750510000311 A21

Statement of uncharged interest pertaining to account No. 0875050009960

A22

Statement of uncharged interest pertaining to account No.08750510000311 A23

Statement showing interest charged to account No. 0875050009960 A24

Statement showing interest charged to account No. 08750510000311 A25 16.07.2012 Notice under Section 13(2) sent to defendants 1 to 4 and 6 A26 16.07.2012 Notice under Section 13(2) sent to defendants 1 and 5. A27

Acknowledgment cards evidencing the receipt of Section 13(2). A28

Power of Attorney A29 12.02.2014 Sale Certificate

Defendants’ Exhibits – Nil

(PRESIDING OFFICER)

A- SCHEDULE

1. All stocks of textile goods, sarees, readymades and all other articles, goods, stocks and movable property of any kind situated at Pavaratty.

2. All stocks of textile goods, sarees, readymades and all other articles, goods, stocks and movable property of any kind situated at Puvathur.

B- SCHEDULE

1. All stocks of furniture, furnishing items situated at Pavaratty.

2. All stocks of furniture, furnishing items situated at Puvathur.

(PRESIDING OFFICER)

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

Dated this the 12th day of June, 2017

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

Between UCO Bank, Thrissur Branch

…Applicant

And

A.V.Francis & others …Defendants

FINAL ORDER