BANK OF MAHARASHTRA vs Ms Garuda Vayu Sakthi Ltd Rep By Mr N Srinivasan And Three Others on 24 September 2024

: - O R D E R - :

This is an application under Section 19 of Recovery of Debts due and Bankruptcy Act, 1993 (formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the defendants for recovery of a sum of Rs.121,52,58,631/- (Rupees One Twenty One Crores Fifty Two Lacs Fifty Eight Thousand Six Hundred and Thirty One Only) being the aggregate amount due, with further interest thereon @14.25% per annum from the date of OA till realization and for sale of schedule mentioned properties along with costs. Initially the same was filed before the DRT-II, Chennai. The same is transferred to this Tribunal consequent the notification dated 04.10.2022 issued by the Ministry.

However, by a memo dated 04.08.2024 filed before this Tribunal on 04.09.2024 vide Sr.No.1080/2024, the applicant submits that during the pendency of the OA, except Item No.1 in Schedule A, the other properties described in the Appendices are sold through the Insolvency Proceedings initiated against Defendants 2 & 3. It is also made clear in the memo that now the reliefs are restricted against Defendants 1 & 4 only. [The 1st Defendant is the borrower and the 4th Defendant offered the security to the applicant bank towards the advances made to the first Defendant apart from Defendants 2 & 3 against whom the relief’s are not sought]

1.0.

FACTS OF THE CASE:

1.1. It is the case of the Applicant that the 1st Defendant is a company incorporated under the Companies Act, engaged in the process of manufacturing Wind Energy Generators of 700 kW and 1700 kW capacity. The 1st Defendant approached the Applicant seeking financial assistance in the form of various cash credit facilities and working capital requirements. The same was sanctioned by the Applicant on certain terms and conditions vide letter dated 14.09.2012. The 1st Defendant availed various credit facilities including Term Loan of Rs.30 Crores, Cash Credit limit of Rs.30 Cr. L/C limit as a sub-limit of cash credit and bank guarantee for Rs.30 Cr. The 1st Defendant availed the aforesaid facilities to the tune of 90 Crores. The 1st Defendant executed necessary documents in favour of applicant bank such as  Demand Promissory Note for a sum of Rs.90 Crores agreeing to repay the said sum together with interest at 13.75% p.a. dated 25.10.2012.  Deed of Hypothecation for all facilities hypothecating the movables assets as set out in Schedule B of the Hypothecation Deed dated 25.10.2012.  Defendants 2 and 3 who are respectively the Director and Managing Director of the 1st Defendant Company guaranteed the repayment of the facilities extended to the 1st Defendant, had executed separate Guarantee Deeds on 25.10.2012.  The 1st Defendant also executed on agreement relating to the opening of import letter of credit and Counter Guarantee for BG limit, both dated 25.10.2012.

1.2. The Applicant further submits that the 3rd Defendant, as security for the due repayment of the loan availed of by the defendants deposited the title deeds relating to the Schedule property with an intention to create an Equitable Mortgage in respect of the property more fully described in the Schedule A on 25.10.2012, a Memorandum was recorded for the creation of Equitable Mortgage to record that the 3rd Defendant had visited the Applicant’s Ashok Nagar Branch on 25.10.2012 and deposited, handed over and delivered to the Chief Manager of the Applicant’s T.Nagar branch documents of title, evidences, deeds more fully set out in the Schedule A.

1.3. The 3rd Defendant, as security for the due repayment of the facilities extended to the 1st defendant, deposited the title deeds relating to the properties mentioned in Schedule A which was acquired by him under sale deeds with document No.2531/2012 & 2532/2012. The Memorandum was also registered with the Sub- Registrar Panakudy on 04.11.2015.

1.4. The Applicant further submits that the 1st Defendant was irregular in repaying the amount and was not servicing the interest and the principal as agreed in the agreement. At the request of the 1st Defendant, the existing term loan and other facilities were reviewed and there was a restructuring of the existing facilities. As per the restructuring proposal approved by the Applicant, the following facilities were extended to the 1st Defendant.

Cash credit limit renewal

- 30 cr.

Letter of credit renewal

- 30 cr.

Bank Guarantee – sub limit

to letter of credit

- 10 cr.

Forward cover

- 55 cr.

WCTL-New

- 8.20 cr

FITL for CC (New)

- 1.95 cr.

FITL for TL (New)

- 5.10 cr.

FITL for WCTL (New)

- 1.15 cr.

Term Loan (Existing) – Restructure

& Continuation

- 30.00 cr

The Applicant submits that a sum of Rs.101.40 cr. was sanctioned to the 1st Defendant by the Applicant under the cover of its letter dated 26.06.2014.

1.5. The 1st Defendant accepted the offer of restructuring of the existing facilities sanctioned by the Applicant as per the terms and conditions of the application and passed a resolution dated 25.06.2014 authorising the 3rd Defendant Managing Director to sign necessary documents as may be required in the regard.

1.6. Pursuant to the sanction, the 1st Defendant executed the following documents:  Demand promissory note dated 27.06.2014 for Rs.161.40 Cr.  Composite deed of hypothecation dated 27.06.2014.  Guarantee deed executed by 2nd & 3rd Defendant dated 27.06.2014  Guarantee deed executed by 4th Defendant dated 27.06.2014.  Agreement relating to opening of an inland irrevocable without recourse Letter of Credit dated 27.06.2014.  Counter Guarantee for BG limit dated 27.06.2014  Agreement relating to opening of an irrevocable without recourse import letter of credit under an LC Limit.

1.7. The 4th Defendant executed documents confirming the creation of equitable mortgage earlier created for the restructured facilities as well vide the confirmation of equitable mortgage letter dated 31.10.2012 executed by the 4th Defendant through its authorised signatory – Director who is none other than the 2nd Defendant.

1.8. The Defendants have failed to adhere to the terms and conditions of the sanction. Since the Defendants were irregular, the account of the Defendants was declared as a Non Performing Asset as per the prudential norms and guidelines prescribed by the Reserve Bank of India. The Applicant issued a demand notice under section 13(2) of the SARFAESI Act to all the defendants on 23.05.2015.

1.9. As per the accounts maintained by the Applicant, the Defendants are jointly and severally liable to pay a sum Rs.121,52,58,631/- (Rupees One twenty one crores fifty two lakhs fifty eight thousand six hundred and thirty one only) as on 20.06.2017. A copy of the Statement of accounts is enclosed with the OA. Hence the OA.

2.0. CONTOURS OF THE CASE:- 2.1 Summons were issued by the Ld. Predecessor. Summons to D1 to D4 returned unserved with remarks ‘Left’. Applicant filed IA No.379/2018 to carry out amendment of the address of the Defendants. The same is allowed. M/s.Aiyar & Dolia filed vakalat for D1 to D4, but failed to submit the written statement though sufficient opportunities granted. The Ld. Predecessor placed the Defendants exparte on 26.04.2019. The PA was filed before the Ld. Predecessor along with the part satisfaction memo. The matter is transferred to this Tribunal as per the notification of the Ministry of Finance dated 04.10.2022 and the witness was examined before this Tribunal.

3.0 EVIDENCE ON RECORD:- 3.1 Though the Applicant examined AW1, Mr.Sharath Kumar Sinha on 22.02.2023, later his evidence was given up by the applicant and another witness Mr.Tulsi Ram Sahoo was examined on 07.05.2024 in place of the earlier witness. The documents A1 to A26 were produced in Original and returned by the Registry. The rest of the documents are photocopies. In total the applicant relies on documentary evidence Exh. A1 to A26.

3.2 There is no counter proof evidence from the side of the defendants who remained exparte as noted above.

4.0

POINTS FOR DETERMINATION:-

4.1. With the available pleadings and evidence on record, the following point arises for determination.

Whether the applicant is entitled for recovery of sum as prayed for in the OA and if so against which defendants and what relief?

5.0 ANSWERS TO THE POINT FOR DETERMINATION AND REASONS:- 5.1 From the material placed on record and the pleadings , it is seen that the applicant seeks recovery of a total sum of Rs.121,52,58,631/- (Rupees One Twenty One Crores Fifty Two Lacs Fifty Eight Thousand Six Hundred and Thirty One Only) along with interest. 5.2 The Applicant herein has filed CP No.10/2023 against the 2nd Defendant under Section 95 of IBC and Hon.ble NCLT, Chennai has appointed IRP on 10.11.2023. Applicant has also initiated PIRP against the 3rd Defendant in CP No.22/2023 and moratorium is in force in respect of D2 & D3. Further in the schedule mentioned OA, Schedule A, Item No.2 and Schedule B has been sold through Insolvency Proceedings. The property mentioned in Schedule A Item No.1 mentioned in the OA has not been sold and there are no proceedings pending or filed against the Defendant 1 & 4, therefore the OA relief is sought only against D1 & D4 only.

5.3 To put forth their case, the applicant bank adduced the evidence of AW1 Sh.Tulsi Ram Sahoo, through the affidavit. He had also produced certain documentary evidence. Perused the same. The averments made in the Application are reiterated on oath in the affidavit.

6.0 Heard the Ld Counsel Sh.Deva Dakshan, appearing for the applicant bank. He submits that the evidence of AW1 goes unrebutted. He further submits that the recovery certificate be issued against the Defendants 1 & 4 jointly and severally, Less the sale proceeds of the part of the OA schedule property for a sum of

Rs.7,46,06,000/- held on 29.11.2017 and through SA No.257/2017 in DRT-II the borrower’s perspective purchaser has deposited Rs.72.00.000/-. He also filed the written synopsis of the arguments, conveying the facts of the case as mentioned in the OA. It is his contention that the 4th Defendant executed the documents confirming the earlier mortgage created extending the same to the restructured facilities. It is submitted that the Defendants did not comply the demand notice and the sale effected through SARFAESI action was also challenged in SA No.256/2017 and the same came to be dismissed. The Ld. Counsel submits that this order has attained finality. Now the relief’s are sought against the Defendants 1 & 4 only.

7.0 In the back drop of the pleadings and the available evidence on record, this Tribunal is to find out whether the applicant is eligible to recovery certificate and if so to what extent?

8.0 Needless to say that the Defendants remained exparte as per the order dated 26.04.2019. The evidence by way of affidavit of one Sh.Tulsi Ram Sahoo at Exh. A1 shows that he is authorized to swear on behalf of the Applicant. This witness relied on the documents filed at Exhibits A2 to A26.

9.0 The documents evidencing the sanction letter demand promissory note, deed of hypothecation, guarantee agreement, executed by D2 & D3 are at Exhs. A2 to A5 respectively go unrebutted. The guarantee deed executed by the 4th Defendant at Exh. A6 dated 25.10.20212 also goes unrubutted. The memorandum of deposit title deed dated 04.11.2015 and the further sanctioning letter dated 26.06.2014 coupled with the demand promissory note, hypothecation and the guarantee deeds could be seen from Exh. A12 to A18, which corroborates the say of this witness.

10.0 The Exh. A21 is the document submitting that Defendant No.3 representing Defendant No.4, confirms the equitable mortgage for the additional facilities granted by the bank in favour of the 1st Defendant No.1 Company as first charge. It speaks of the title deeds pertaining to the immovable properties and the confirmation of such letter for the additional facilities is dated 30.06.2014, which forms part of Exh. A21.

11.0 This Tribunal has carefully considered the account statement produced at Exh. A25, which is supported by the proper certificate issued under the Banker’s Book Evidence Act, and the certificate affirming the bank statement pertains to the accounts of the Defendants. At the time filing of the OA, the statement of account is produced. At Page No.221 of the OA, the consolidated amounts of due as per the ledger balance pertaining to the account of Defendant No.1 is produced showing the amount of due as Rs. Rs.121,52,58,631/- (Rupees One Twenty One Crores Fifty Two Lacs Fifty Eight Thousand Six Hundred and Thirty One Only) for which the due certificate under the banker’s book evidence act is filed from Page 217 to 220 of the OA.

12.0 After perusal of the documentary evidence and the affirmation of the witness Sh. Tulsi Ram Sahoo AW1 who affirmed at Para 9 of his affidavit that the defendants are due to the tune of Rs. Rs.121,52,58,631/-, the same goes unrebutted. Thus this Tribunal does not find any reason to decline the claim.

13.0 At the same time this Tribunal is to take note of the subsequent developments. The Ld. Counsel for the applicant restricted the claim only against the Defendants 1 & 4. It is also submitted in the written synopsis that certain a sum of Rs.7,46,06,000/- is realized by the Applicant Bank through the selling of part of the schedule properties through the SARFAESI held on 29.11.2017. Now the Applicant Bank seeks recovery for a sum of Rs.113,34,52,631/- as against the Defendants 1 & 4 only. Therefore, the Applicant is entitled to recovery a sum of Rs.113,34,52,631/-.

14.0 As regards the prayers, the Applicant Bank has sought for grant of interest from 20.06.2017 till the date of realization @14.25% p.a. By an order dated 22.02.2023, this Tribunal has noted that the applicant is not entitled to claim lis pendence interest from 27.08.2019. The OA is filed on 21.06.2017. There was an order in MA No.30/2018 seeking condonation of delay in representation. The OA was ordered to be registered only on 14.02.2018. In view of the above, the grant of interest from the date of filing of the OA would be unjustified. Keeping in mind the above developments, this Tribunal is of the considered opinion that the grant of interest be taken as from the order dated 22.03.2023, where this Tribunal denied the lis pendence interest. Hence the following Order:-

-: ORDER :-

The Defendants 1 & 4 are hereby directed to pay Jointly and severally a sum of Rs.113,34,52,631/- (Rupees One Hundred and Thirteen Crores Thirty Four Lakh Fifty Two Thousand Nine Hundred and Forty Four and Paisa Seventy Seven Only) along with simple interest @14.25% p.a. from 22.03.2023 till date of realization along with costs to the applicant bank.

The amounts paid if any or realized after filing of the suit apart from the money recovery through SARFAESI sales be properly adjusted.

The applicant bank is directed to file costs memo within two weeks.

Issue recovery certificate in favour of the applicant bank in terms of this final order, be issued.

The schedule of the properties mentioned herein below shall be the part of the present recovery certificate upon which the bank to enforce recovery.

SCHEDULE - A

Description of immovable properties

District : Thirunelveli Taluk : Veerakaralamputhoor

Village : Keezhakalangal

S.F. No. Extent in ACRES

1.35

0.71.25

0.23.75

0.22.5

0.48.75

0.30

0.47.5

0.92.5

0.71.25

0.57.50

0.65

0.62.75

3.80 389/1A1A 8.10

77.5

Communicate a copy of this order to the parties concerned in terms of Rule 16 read with Rule 2(c) of DRT (Procedure) Rules, 1993.

Sd/- (A.S.JAYACHANDRA) PRESIDING OFFICER DRT-I, CHENNAI

(Dictated to PS, transcribed by him, corrected, signed and pronounced by me on this 24th day of September, 2024)