JAMMU AND KASHMIR BANK LIMITED vs R SURINDER SINGH RATHORE on 6 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.10,86,486/-(Rupees Ten lakhs eight six thousand four hundred eight six only) together with future interest at the rate of 18.25% with monthly rests from the date of filing the OA till date of realization and by sale of the OA ‘A’ schedule property. BRIEF FACTS OF THE CASE

1. The applicant is Body Corporate duly constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 having its Head Office at Maulana Azad Road, Sri Nagar, Kashmir and among other places branch office at Thiruvananthapuram. The Manager being the Principal Officer and power of attorney holder is entitled to sign and verify the application and represent the bank in these proceedings.

2. This Application has been filed on 11.08.2011 before the Tribunal. The applicant submits that the application 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 1st defendant executed security documents on 25.09.2002, 07.09.2005, 05.09.2008 and 25.05.2010 in favour of the applicant bank. On 08.04.2003, 05.09.2008, the date on which acknowledgment of debt and on 25.10.2006, 24.11.2010 and 16.02.2011 the dates on which notices/remainders issued by the bank to the defendants and on 14.02.2008 the date of issue of legal notice. Hence the application is within the period of limitation. As regards to the claim of the applicant

bank in the OA is for recovery of an amount of Rs.10,86,486/- under the loan accounts with future interest from 11.08.2011 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 1st defendant is proprietary concern under name M/s.Sundra Marketing carrying on business sale and service of computers. Defendants 2 and 3 on behalf of 1st defendant had approached the applicant bank and requested for cash credit facility of Rs.5,00,000 for business purpose. Accordingly, applicant has sanctioned the cash credit facility of Rs.5,00,000/- lakhs in favour of 1st defendant after executing Demand promissory note for Rs.5,00,000/- on 25.09.2002, Loan agreement dated 25.09.2002, Hypothecation agreement dated 25.09.2002 by hypothecating all the stocks of computers and accessories lying in the shop, stores etc., and book debts, Letter of undertaking dated 25.09.2002, Letter of continuity dated 25.09.2002 and Deed of guarantee dated 25.09.2002 by defendants 2 and 3 jointly in favour of the applicant guaranteeing the due performance of the contract by the 1st defendant. The cash credit facility is for a period of one year subject to the renewal after review.

4. It is submitted by the applicant that the 1st defendant acknowledged his liability for Rs.2,52,575/- vide letter dated 01.04.2003. The 1st defendant executed another demand promissory notes for Rs.5,47,364.56/- on 07.09.2005, Rs.4,37,364.56 on 05.09.2008 and Rs.4,19,364.56/- on 22.05.2010 by renewing the existing limit.

5. As the defendants were not regular in repayment of loan despite the undertaking made by them and they failed to regularize the account and did not operated the account, the applicant had issued notice dated 25.10.2006 to the defendants calling upon them 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 issued legal notice dated 14.02.2008 calling upon the defendants to pay the arrears within 15 days of receipt of notice. As there is no response to the notices sent by the applicant, the applicant bank had sent reminders on 24.11.2010 and 16.02.2011. Nonetheless, the defendants have not taken any steps to settle the dues. Hence the applicant is constrained to file the present OA for recovery of the amount due under cash credit account No.4444020100000007. As per the statement of account maintained with the applicant bank, an amount of Rs.10,86,486/- (Rupees Ten lakhs eight six thousand four hundred eight six only) is due from the defendants.

6. After filing of the OA, the applicant has taken out summons on defendants as directed by the Tribunal. The summons issued to the defendants were duly served them and service of summons was completed as per the regulations. Defendants 1 and 2 entered appearance through their counsel and filed Vakalath, but none represented for the 3rd defendant and he remained absent to the proceedings. Hence 3rd defendant is set as ex-parte on 30.05.2013. Though Vakalath is filed by 1st and 2nd defendant and duly represented through their counsel they have failed to file written statement as

directed by the Tribunal and the chance of filing written statement was closed on 27.09.2016.

7. This Original Application having been final heard on 02.08.2017 in the presence of Adv.Sasi Counsel appearing for the applicant bank. The Ld. Counsel for the applicant submits that though the applicant has filed 33 documents along with the proof affidavit document Nos.13 to 16 are notices and document Nos.17 to 31 are circulars of which need not be marked. Recording the submission of the counsel for the applicant the evidence on the side of the applicant bank consists of the proof affidavit of its Branch Head, AW1 and Exhibit A1 to A14 were 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 Branch Head. 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 A14 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 of summons and after filing Vakalath and appearance though counsel by 1st and 2nd defendant is 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 are directed to pay a sum of Rs.10,86,486/- (Rupees Ten lakhs eight six thousand four hundred eight six only) together with further interest @14.25% per annum with monthly rests from 11.08.2011 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’ 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 defendants, 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.

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 06th day of October, 2017]

(S.V.GOWRAMMA) Presiding Officer

A P P E N D I X Witness for Applicant: AW1: Munib Ahmad Bhat, Branch Head of the applicant bank.

Witness for Defendant(s): Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents

A1. 28.08.2002 Original loan application form submitted to the applicant bank by the 1st defendant. A2. 25.09.2002 Original demand promissory note for Rs.5,00,000/- executed by the 1st defendant in favour of the applicant bank. A3. 25.09.2002 Original loan agreement for Rs.5,00,000/- executed by the 1st defendant in favour of the applicant bank. A4. 25.09.2002 Original hypothecation agreement executed by the 1st defendant in favour of the applicant bank hypothecating all the stocks of computers and accessories lying in the shop, stores, etc., and book debts. A5. 25.09.2002 Original letter of undertaking executed by the 1st defendant in favour of the applicant bank. A6. 25.09.2002 Original letter of continuity executed by the 1st defendant in favour of the applicant bank. A7. 25.09.2002 Original deed of guarantee executed by the defendants 2 and 3 jointly in favour of the applicant bank. A8. 01.04.2003 Original balance and security confirmation letter for Rs.2,52,575/- acknowledged by the 1st defendant. A9. 07.09.2005 Original demand promissory note for Rs.4,47,364.56 executed by the 1st defendant in favour of the applicant. A10. 05.09.2008 Original balance and security confirmation letter for Rs.4,37,364.56 acknowledged by the 1st defendant. A11. 05.09.2008 Original demand promissory note for Rs.4,37,364.56 executed by the 1st defendant in favour of the applicant bank. A12. 22.05.2010 Original demand promissory note for Rs.4,19,364.56 executed by the 1st defendant in favour of the applicant. A13.

True copy of the statement of account in respect of the account No.4444020100000007 in the name of M/s.Sundra Marketing with applicant bank. A14.

True copy of work sheet showing the calculation of un applied interest.

Defendants’ Exhibits – Nil

(PRESIDING OFFICER)

A SCHEDULE

All the stock in trade such as computers and peripherals kept at the premises of the 1st defendant M/s.Sundra Marketing, D.P.I. Junction, Jagathy, Thycaud P.O., Thiruvananthapuram -14 and/or in transit or in any other places.

[PRESIDING OFFICER]

IN THE DEBTS RECOVERY TRIBUNAL-II, KERALA AT ERNAKULAM

Dated this the 06th day of October, 2017

Present: S.V.Gowramma, B.A., LL.B Presiding Officer TA.No.1188/2016 (O.A No.350/2011) Between Jammu & Kashmir Bank Ltd., Thiruvananthapuram Branch. …Applicant

And R.Surinder Singh Rathore and others.

…Defendants

FINAL ORDER