HDFC BANK vs M/s GUJARAT SALT Co. on 10 July 2017

FINAL ORDER

The applicant bank has filed Original Application [OA] on 30.10.2015 under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.63,34,476.91 (Rupees Sixty Three Lakhs Thirty Four Thousand Four Hundred Seventy Six and Ninety one paise only) as on the date of application. Applicant has sought pendente lite and post pentente lite interest at the rate of 18% per annum with monthly rests on the amount Rs.59,36,800.34 (Rupees Fifty Nine Lakhs Thirty Six Thousand Eight Hundred and Thirty Four paisa only) together with costs from the defendants jointly and severally or from the assets described in schedule ‘A’ and ‘B’ to the OA and also by proceedings against defendants personally. BRIEF FACTS OF THE CASE

The 1st defendant is a proprietorship concern. The 2nd defendant is the proprietor of 1st defendant. During the year 2012, 2nd defendant approached the applicant seeking for a credit facility of Rs.50 lakhs for the purpose of working capital for the 1st defendant. The applicant bank after considering the repayment capacity had sanctioned cash credit facility of Rs.50 lakhs on 03.11.2012. The 1st defendant has executed necessary loan document pertaining to the terms and conditions of cash credit facility. The 2nd and 3rd defendant stood as guarantors to the aforesaid credit facility availed by the 1st defendant.

2. The credit facility is secured by equitable mortgage of immoveable owned by the 2nd and 3rd defendant. On 23.11.2012, the 2nd defendant created an equitable mortgage in favour of the applicant bank in respect of property having extent of 4 Ares and 05 Square Meters of property comprised in Survey No.96/3/A3 of Kottuvally Village covered by Sale Deed No.2921/2011 of SRO, Paravur described in A schedule to the OA. Likewise 3rd defendant also created an equitable mortgage in favour of the applicant bank in respect of property having extent of 10 cents of property comprised in Survey No.877/2014 of Vilvattom Village covered by Sale Deed No.3021/2005 of SRO, Thrissur described in B schedule to the OA. Further the title deeds of schedule A & B properties are deposited by 2nd and 3rd defendant by way of deposit of title deeds with an intention to create equitable mortgage. Defendants further agreed to insure the various assets hypothecated in favour of applicant bank to secure the advance at their costs, failing which the applicant bank was given liberty to insure the same at its option by duly debiting the expenses thereof in account of the credit facility.

3. The defendants were not regular in repayment towards the loan account despite the undertaking made by them for due repayment of the loan amount, they failed to do so and applicant has various occasions requested the defendants to regularizes the loan account. But no positive steps were taken by the defendants to regularize the account.

4. During July 2013, defendants requested the applicant bank to liquidate a portion of the cash credit facility of Rs.20lakhs by permitting them to repay Rs.56,000/- each per month in 36 installments starting from 31.07.2013 and to service the interest separately. Further they sought permission for the 1st defendant to operate the balance portion of cash credit facility of Rs. 30 lakhs. The

2nd and 3rd defendant also extended the mortgages created by them in favour of the applicant to secure the credit facility availed by the 1st defendant to the renewed facility also by executed a memorandum of deposit of title deed as well as a declaration cum indemnity in favour of the applicant.

5. As the defendants failed to regularize the cash credit facility, applicant had issued notice on 20.11.2014 demanding the defendants 1 to 3 to pay the amount due under the cash credit facility availed by the 1st defendant concern. Nonetheless, the defendants have not taken any steps to settle the dues. As per the statement of account maintained with the applicant bank, an amount of Rs.63,34,476.91(Rupees sixty three lakhs thirty four thousand four hundred seventy six and ninety one paise only) is due from the defendants as on 30.10.2015

6. The applicant bank has taken out the summons as directed by the Tribunal and has filed the proof of service on 16.12.2015. The summons issued to the defendants was duly served on them which is evident from the acknowledgment cards produced by the bank. Inspite of issuance of summons, the defendants neither appeared nor were they represented and they chose to remain absent and hence they were declared ex-parte on 07.03.2017.

7. The evidence on the side of the applicant bank consists of the proof affidavit of its Assistant Vice President, AW1 and Exhibits A1 to A19 was marked on the side of applicant.

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 applicant bank is adduced by its Assistant Vice President 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 A19 which clearly establishes the case of the applicant bank to allow the present OA. Added to this, the absence of defendants inspite of service of summons 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.

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 a final order on the following lines:-

O R D E R

(a) The OA is allowed with costs;

(b) The defendants jointly and severally are directed to pay a sum of Rs.63,34,476.91/- (Rupees Sixty three lakhs thirty four thousand four hundred seventy six and ninety one paise only) with further interest on the sum of Rs.59,36,800.34 (Rupees fifty nine lakhs thirty six thousand eight hundred and thrifty four paise only) @12.55% per annum with monthly rests from 31.10.2015 till the date of realization and by sale of OA ‘A’ and ‘B’ schedule properties;

(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;

(c) 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; (d) 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;

(e) The applicant bank shall file memo of costs within seven days from the date of this final order; (f) 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 10th day of July, 2017]

(S.V.GOWRAMMA) Presiding Officer

A P P E N D I X Witness for Applicant: AW1: Sreekala.S , Assistant Vice President of the applicant bank.

Witness for Defendant(s): Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents

A1 03.11.2012 Original of the sanction communication issued by the authorized signatory of the applicant to the 1st defendant. A2 03.11.2012 Demand Promissory Note for Rs.50 lakhs executed by defendants 1 and 2 in favour of the applicant bank. A3 03.11.2012 A letter of continuing security executed by defendants 1 and 2 in favour of the applicant bank. A4 03.11.2012 Master facility agreement executed by defendants 1 and 2 in favour of the applicant bank. A5 03.11.2012 Letter of hypothecation executed by defendants 1 and 2 in favour of applicant. A6 03.11.2012 Power of attorney executed by defendant 1 and 2 in favour of applicant bank. A7 03.11.2012 Letter of guarantee executed by defendants 2 and 3 in favour of the applicant bank. A8 03.11.2012 Affidavit sworn by defendants 1 and 2 in favour of applicant bank. A9

Original Sale Deed No.2921/2011 of Paravur SRO. A10

Original Sale Deed No.3021/2005 of Thrissur SRO. A11 24.11.2012 Original memorandum evidencing creation of mortgage executed by defendants 2 and 3 in favour of applicant bank. A12 24.11.2012 Original of declaration cum indemnity executed by defendants 2 and 3 in favour of applicant bank. A13 03.07.2013

Original of memorandum recording past transaction of creation of mortgage executed by defendants 2 and 3 in favour of applicant bank A14 03.07.2013 Original of declaration cum indemnity executed by defendants 2 and 3 in favour of applicant bank. A15 20.11.2014 Office copy of the notice issued on behalf of the applicant bank to the defendants. A16

Certified copy of the relevant pages of the books of account maintained by the applicant bank in respect of cash credit facility provided to the 1st defendant till 01.05.2014 A17

Certified copy of the balance due statement of the books of account maintained by the applicant bank from 01.05.2014 to 30.10.2015. A18

Original of the certificate showing rates of interest applied in the account of the cash credit facility provided to the 1st defendant. A19

Photocopy of the power of attorney executed by the applicant bank in favour of the Assistant Vice President S.Sreekala.

Defendants’ Exhibits – Nil

(PRESIDING OFFICER)

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

Dated this the 10th day of July, 2017

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

Between HDFC Bank Ltd. …Applicant And M/s.Gujarat Salt Co., Represented by its Proprietor Smt. Gigi George …Defendants

FINAL ORDER