FEDERAL BANK vs LIJO T J on 6 June 2017

FINAL ORDER

The applicant bank has filed Original Application [OA] on 15.06.2015 under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.1,50,46,712.40 due under the enhanced Cash Credit loan account with further interest @16.45% per annum with monthly rests an amount of Rs.1,50,19,545.48 [Rupees One Crore fifty Lakhs Nineteen

Lakhs Five Hundred Forty Five and Forty Eight paisa] as on 15.06.2015 ie., from the date of application till realization in full from the defendants 1 and 2 jointly and severally, directing the 3rd defendant to pay Rs.1,26,71,774.36 which due under enhanced Cash Credit loan account with further interest @ 16.45% per annum with monthly rests, i.e., to the extent of the amount guaranteed by him, from the date of the application till realization and by sale of ‘A’ to F schedule properties. BRIEF FACTS OF THE CASE

1. The applicant is a Banking Company constituted under the Companies Act, 1956 having its Registered office at Alwaye, Kerala and a branch amongst other places at Anchal in Kollam District, Kerala. The applicant is represented by its Chief Manager.

2. The 1st defendant is the husband of the 2nd defendant and son of 3rd defendant. 1st Defendant is carrying on a sole proprietorship concern in the name and style of M/s.Thumpassery Traders at Alanchery, Anchal, Yeroor P.O, Kollam. During June 2012, Defendants 1 and 2 approached the applicant bank seeking working capital facility for the purpose of the sole proprietorship business carried on by 1st defendant. The 1st defendant is the principal borrower and 2nd defendant is the co-obligant/co-borrower.

3. At the request of the defendants, the applicant sanctioned a cash credit facility of Rs.75,00,000/- [Rupees Seventy Five Lakhs only]. The 1st and 2nd defendants have executing On Demand Promissory Note dated 02.07.2012 for Rs.75,00,000/-, Security Delivery Letter dated 02.07.2012 and Agreement for Cash Credit dated 02.07.2012. Credit facility is secured by the collateral security of immoveable properties described under Schedule A and B to the OA. The 1st and 2nd defendants have deposited original Settlement Deed No.553/2008 dated 23.02.2008 of Anchal SRO and Settlement Deed No.564/2008 dated 25.02.2008 of Anchal SRO favoring the applicant’s Anchal branch. Further the 1st defendant has confirmed the deposit of title deed and creation of mortgage vide letter dated 03.07.2012. On 02.07.2012, 1st defendant deposited original Sale Deed No.1268/2008 dated 24.04.2008 of Anchal SRO described in C schedule to the OA with applicant’s Anchal Branch. 1st defendant also confirmed the deposit of title deed and creation of mortgage vide letter dated 03.07.2012.

4. During October, 2013 defendants 1 and 2 approached the applicant bank seeking for enhancement of the working capital. Accordingly the applicant sanctioned a enhanced credit facility of Rs.1,25,00,000/- and the defendants agreeing to the terms and conditions of the sanction have executed loan documents. The defendants No.1 & 2 have executed Demand Promissory Note dated 29.10.2013 for Rs.1,25,00,000/-, Security Delivery Letter dated 29.10.2013, Agreement for Cash Credit dated 29.10.2013 and Revival letter dated 29.10.2013. Further the credit facility is secured by the hypothecated the stock described under ‘D’ schedule and hypothecation of the books debts described in ‘E’ schedule to the OA favouring the applicant bank’s branch at Anchal. The 3rd defendants has stood has guarantor to the cash credit and has executed an Agreement of Guarantee dated 29.10.2013.

5. The cash credit facility is further secured by the extension of mortgage of Schedule A to C to the OA as continuing collateral security for the loan, and the 1st defendant on 29.10.2013 extended the benefit of the mortgage by way of deposit of title deeds over the properties mentioned in schedules ‘A’ to ‘C’ to the OA. The same is also confirmed by the other defendants on 29.10.2013 by a letter in lieu of redeposit dated 30.10.2013. 1st defendant had also deposit original Sale Deed No.553/2013 dated 27.02.2013 of Anchal SRO described in ‘F’ schedule to the OA with the applicant bank’s branch at Anchal. 1st Defendant also confirmed the deposit of the title deed vide letter dated 27.02.2013

6. It is stated by the applicant that the defendants failed and neglected to make repayment towards the loan account as per the terms and condition specified in the loan agreement. Hence applicant issued letter dated 30.07.2014 directing them to remit the entire amount due to the bank within a 15 days from the receipt of notice. As the parties failed to close the loan account applicant has issued lawyer notice dated 15.11.2014 to defendant 1 to 3. 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.1,50,49,041.48/- is due from the defendants. The amount claimed in the OA is Rs.1,50,46,712.40, which is the amount outstanding after deducting the effect of capitalization of penal interest.

7. The 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 13.03.2017.

8. The evidence on the side of the applicant bank consists of the proof affidavit of its Chief Manager and Principal Officer, AW1 and Exhibits A1 to A23 were 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 Chief 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 A23 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 1 and 2 jointly and severely are directed to pay to the applicant bank a sum of Rs.1,50,46,712.40 (Rupees one crore fifty lakhs forty six thousand seven hundred twelve and forty paise only) due under the enhanced Cash Credit loan account with further interest on the sum of Rs.1,50,17,216.40 (Rupees one crore fifty lakhs seventeen thousand two hundred sixteen and forty paise only) @14.45% per annum with monthly rests from 16.06.2015 till the date of realization; (b) Third defendant is directed to pay Rs.1,26,71,774.36 (Rupees one crore twenty six lakhs seventy one thousand seven hundred seventy four and thirty six paise) out of Rs.1,50,46,712.40 due under the enhanced Cash Credit loan account with further interest thereon at the rate of Rs.14.45% per annum with monthly rests from 16.06.2015 till the date of realization;

(c) and also its costs, in proportion to the amount ordered to be recovered from them.

(d) In the event of failure of the defendants to pay the OA amount, the bank is at liberty to sell the OA ‘A’ to ‘F’ schedule properties of the defendants and the sale proceeds be appropriated towards the OA claim amount as required under law.

(e) Schedule ‘A’ to ‘F’ 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 6th day of June, 2017]

(S.V.GOWRAMMA)

Presiding Officer

A P P E N D I X

Witness for Applicant:

AW1: Abdul Jaleel, Chief Manager of the applicant bank.

Witness for Defendant(s): Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents

A1 02.07.2012 Demand Promissory Note for Rs.75,00,000/- A2 02.07.2012 Security Delivery Letter. A3 02.07.2012 Agreement for Cash Credit. A4 23.02.2008 Settlement Deed No.553/2008 of Anchal SRO. A5 25.02.2008 Settlement Deed No.564/2008 of Anchal SRO. A6

03.07.2012 Letter Confirming deposit of title deed. A7

24.04.2008 Sale Deed No.1268/2008 of SRO Anchal. A8

03.07.2012 Letter Confirming deposit of title deed. A9

28.10.2013 Agreement of Guarantee executed by 3rd defendant. A10 29.10.2013 Demand Promissory Note for Rs.1,25,00,000/- A11 29.10.2013 Security Delivery Letter. A12 29.10.2013 Agreement for Cash Credit. A13 29.10.2013 Revival letter dated. A14 30.10.2013 Letter in lieu of re-deposit of title deeds. A15 30.10.2013 Letter in lieu of re-deposit of title deeds. A16 27.02.2013 Sale Deed No.553/2013 of SRO Anchal. A17 30.10.2013 Letter of 1st Defendant confirming creation of mortgage. A18 30.07.2014 Loan Recall Notice issued to defendants A19 15.11.2014 Lawyer notice issued to defendants. A20

Statement of Account

A21

Statement showing the amount due as per the agreement of guarantee. A22

Statement showing penal interest and capitalized panel interest charged. A23

Statement showing the different rates of interest charged in the loan account

Defendants’ Exhibits – Nil

(PRESIDING OFFICER)

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

Dated this the 6th day of June, 2017

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

Between Federal Bank Ltd., Branch:Anchal, Kollam District. …Applicant And

Lijo TJ and others …Defendants

FINAL ORDER