BANK OF BARODA vs MS Surya Aluminium Fabrication on 19 August 2017

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.10,45,135/- with interest @ 10.95% per annum with monthly rests from 01.12.2015 till the date of payment in the Cash Credit loan account No.209006261000001 and a sum of Rs.1,86,465/- with interest @ 10.95% per annum with monthly rest from 01.12.2015 till the date of payment in Secured Term loan account No.209009281000002 from the defendant and for other connected reliefs.

BRIEF FACTS OF THE CASE

1. The applicant is a banking company constituted under the Banking Companies (Acquisition of Transfer of Undertakings) Act 1980, having its head office at M.G.Road, Bangalore and one of its branch at Edathiruthy. The applicant is represented by its Principal Officer and Branch Manager who is authorized to sign and verify this application and represent the bank in these proceedings.

2. The defendant is the proprietor of M/s.Surya Aluminium Fabrications had approached the applicant for a business loan to the tune of Rs.15,00,000/-. Accordingly, applicant sanctioned the loan for an amount of Rs.15,00,000/- vide letter dated 31.01.2014. Out of the said amount Rs.12,00,000/- was sanctioned as Cash Credit and Rs.3,00,000/- was sanctioned as Secured Term loan. As per the terms of sanction and as per the agreement/document executed by the defendant in favour of the applicant, the cash credit loan for Rs.15,00,000/- was sanctioned for one year and to be renewed annually and the term loan of Rs.3,00,000/- was to be repaid in 48 EMI of Rs.7,900/-. Interest rate agreed between the parties was 11.50% per annum (floating).

3. It is stated by the applicant that as a security for the loan facilities the defendant had hypothecated various stock of raw materials and machinery/system and other equipment etc installed in the premises of M/s.Surya Aluminium Fabrications and executed hypothecation agreement on 31.01.2014. In addition to the above the defendant had also executed an agreement for demand cash credit against hypothecation of stocks and book debts, letter of repayment and demand promissory note on 31.01.2014 for the financial facility availed by him.

4. It is the contention of the applicant that the defendant did not adhere to the terms and conditions of the loan facilities availed by him. Therefore, the applicant issued demand notice dated 02.11.2015 and lawyer notice dated 20.11.2015 to the defendant, calling upon him to pay the outstanding amounts in two loan accounts. The said notices were received by the defendant, but the defendant failed to clear the dues under the loan accounts. Hence the applicant was constrained to file the present OA.

5. As per the statement of account maintained by the applicant bank, a sum of Rs.10,45,135/- is due under the cash credit loan account and a sum of Rs.1,86,465/- is due under the term loan account of the defendant.

6. The applicant bank has taken out the summons as directed by the Tribunal and has filed the proof of service on 08.03.2016. The summons issued to the defendant was duly served on him. Inspite of issuance of summons, defendant neither appeared nor he is represented by a counsel and he chose to remain absent and hence he was declared ex-parte on 21.09.2016.

7. The evidence on the side of the applicant bank consists of the proof affidavit of its Branch Manager, AW1 and Exhibits A1 to A18 are 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?

Findings:

Point No.1: In affirmative Point No.2: As per order

Reasons:-

9. The evidence of the applicant bank by way of proof affidavit of Branch Manager, AW1 reiterates the facts pleaded in the OA and the affidavit is corroborated by the above referred Exhibits A1 to A18 which clearly establishes the case of the applicant bank to allow the present OA. Added to this, the absence of defendant inspite of service of summons 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. In view of the above the present OA is to be allowed with costs as sought by the applicant bank.

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

11. The OA stands allowed with costs.

(a) The defendant is directed to pay to the applicant bank a sum of Rs.10,45,135/- (Rupees Ten lakhs forty five thousand one hundred and thirty five only) under the cash credit account No.209006261000001 with interest @ 10.95% per annum with monthly rests from 01.12.2015 till the date of repayment; (b) The defendant is directed to pay to the applicant bank a sum of Rs.1,86,465/- (Rupees One lakh eighty six thousand four hundred and sixty five only) under the term loan account No.209009281000002 with interest @ 10.95% per annum with monthly rests from 01.12.2015 till the date of repayment;

(c) In the event of non-realization of the OA claim amount, the bank is at liberty to proceed against the person and other properties of the defendant, as required under law; (d) The applicant bank shall file memo of costs within seven days from the date of this final order; (e) 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 19th day of August, 2017]

(S.V.GOWRAMMA) Presiding Officer

A P P E N D I X Witness for Applicant: AW1: Joseph Bernard, Branch Manager of the applicant bank.

Witness for Defendant(s): Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents

A1 26.12.2013 The loan application submitted by the defendant to the applicant. A2 31.01.2014 Sanction letter issued by the applicant to the defendant. A3 31.01.2014 Articles of agreement for Term Loan executed by the defendant in favour of the applicant. A4 31.01.2014 Agreement for demand cash credit against hypothecation of stocks and books debts executed by the defendant in favour of the applicant. A5 31.01.2014 Hypothecation agreement for Term Loan executed by the defendant in favour of the applicant. A6 31.01.2014 Hypothecation agreement for Cash Credit executed by the defendant in favour of the applicant. A7 31.01.2014 Letter of repayment with respect to Term Loan executed by the defendant in favour of the applicant. A8 31.01.2014 Letter of repayment with respect to Cash Credit executed by the defendant in favour of the applicant. A9 31.01.2014 Demand promissory note on Term Loan executed by the defendant in favour of the applicant. A10 31.01.2014 Demand promissory note on Cash Credit executed by the defendant in favour of the applicant. A11 02.11.2015 Office copy of the demand notice issued by the applicant to the defendant. A12

Postal acknowledgment card evidencing the receipt of demand notice. A13 20.11.2015 Office copy of the lawyer notice issued to the defendant.

A14

Postal acknowledgment card evidencing the receipt of lawyer notice. A15

Statement of account in respect of cash credit account No.209006261000001. A16

Statement of account in respect of term loan account No.209009281000002. A17

Interest statement with capitalization effect of penal interest in respect of cash credit account No.209006261000001. A18

Interest statement with capitalization effect of penal interest in respect of term loan account No.209009281000002.

Defendant Exhibits – Nil

(PRESIDING OFFICER)

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

Dated this the 19th day of August, 2017

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

Between Vijaya Bank, Edathiruthy Branch, Represented by its Branch Manager.

…Applicant

And Jibin K.Anand.

Proprietor, M/s.Surya Aluminium Fabrication. …Defendant

FINAL ORDER