IDBI BANK vs M/s. Neueon Towers Ltd on 31 May 2022

FINAL ORDER

1.

1. This application is filed by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 against the defendants 1 to 3 seeking issuance of a Recovery Certificate for an aggregate sum of Rs.777,83,02,686.34p together with interest as mentioned below from the date of filing of the application till the date of realisation along with costs of the application and for sale of schedule properties.

(a) A sum of Rs.6,16,09,129/- with further interest at the rate of 14% per annum with monthly rests being the amount due under Rupee Term Loan Account No.0129673200001847; (b) A sum of Rs.290,12,26,001/- with further interest at the rate of 14.50% per annum with monthly rests being the amount due under Working Capital Term Loan Account No.0129673200001809.

(c) A sum of Rs.419,43,97,349.34p with further interest at the rate of 10.50% per annum being the amount due under Cash Credit Loan Account No.129655100000569; (d) A sum of Rs.60,81,09,703/- with further interest at the rate of 14.50% per annum being the amount due under Funded Interest Term Loan Account No.0129673200001908; (e) A sum of Rs.1,29,60,504/- being the amount due under Cumulative Redeemable Preference Shares (CRPS).

2. It is the case of the applicant hat the First Defendant is a company incorporated under the Companies Act, 1956 and doing business of constructing towers for Telecom and electric Transmissions. The Second and Third Defendants are the Directors of the First Defendant Borrower Company and stood as Guarantors for availing all the credit facilities availed by the First Defendant. The defendants 2 to

9 are the pledgers, pledged their shares mentioned in the Schedule of Properties for the First Defendant. The Defendant No. 10 to No.15 are the Co Lenders / Joint Lenders and Consortium members.

3. It is also the case of the applicant that the First Defendant was previously known as M/s. Sujana Towers Limited, incorporated in April 2006, acquired the business of the Tower Division of M/s.Sujana Metal Products Limited (SMPL) through de- merger of the Tower Division of SMPL under a Scheme of Arrangement approved by the Hon’ble High Court of Andhra Pradesh vide its order dated 10.04.2007. The de-merger was effective from 01.07.2006 and came into operation on 04.05.2007, upon filing of the certified copy of the High Court order with ROC.

4. It is stated that under a scheme of arrangement approved by the Hon’ble High Court referred above the applicant bank granted financial assistance of Rupee Term Loan of Rs.11.26 crores on account of the demerger of Tower Division of Sujana Metal Products Limited (SMPL) and Cumulative Redeemable Preference Shares (CRPS) of Rs.2.97 crores to the Towers Division of SMPL and the 1st defendant.

5. It is also stated that after the above said Scheme of Arrangement, the First defendant approached the Applicant Bank and requested for sanction of various working capital credit facilities for developing its business and the defendants 2 and 3 agreed to be the guarantors for the credit facility being availed by the 1st defendant. It is stated that considering the request of the 1st defendant, the applicant bank vide its sanction letter dated 19.6.2008 sanctioned a sum of Rs.50 crores to the 1st defendant i.e., CC/WCDL/STL limit of Rs.30 crores and LC/BG limit of Rs.20 crores. It is also stated that the 1st defendant vide its Board Resolution dated 20.6.2008 resolved to avail the sanctioned facility of Rs.50 crores and the 1st defendant on 21.6.2008 executed Facility Agreement and Agreement of Hypothecation of Goods and assets, defendants 2 and 3 executed Guarantee Agreements and undertaking on 21.06.2008. The 3rd defendant executed a declaration and undertaking dated 13.12.2008 in the matter of joint mortgage by deposit of title deeds by constructive delivery in respect of Item I of the OA schedule property and a Memorandum of Entry was executed on 15.12.2008.

6. It is the case of the applicant that at the request of the 1st defendant the above limit was enhanced from Rs.50 crores to Rs.90 crores vide its sanction letter dated 11.3.2009 and the 1st defendant executed Supplemental Facilities Agreement and Supplemental Deed of Hypothecation, omnibus counter guarantee on 11.3.2009 for the enhanced limit of Rs.90 lakhs. It is stated that the defendants 2 and 3 executed guarantee agreement and undertaking letters on 11.03.2009 to secure the enhanced limit of Rs.90 crores.

7. It is also the case of the applicant that at the request of the 1st defendant, the applicant bank along with defendants 11, 12 and 13 in a consortium led by the applicant sanctioned Working Capital Facility of Rs.240 crores (applicant funded Rs.90 crores) on 5.11.2009 and in respect of the said consortium agreement various documents were executed on 5.11.2009 viz., Working Capital

Consortium Agreement by 1st defendant in favour of the applicant bank, Joint Deed of Hypothecation in favour of Consortium lenders creating first pari passu charge on entire stock of current assets by 1st defendant in favour of applicant and defendants 11, 12 and 13, hypothecation agreement by 1st defendant in favour of applicant and defendants 11, 12 and 13, Omnibus counter guarantee, Interse agreement executed between the consortium lenders, guarantee agreements and undertaking by 2nd defendant. The 3rd defendant executed guarantee agreement and undertaking on 16.11.2009.

8. It is also the case of the applicant that at the request of the 1st defendant the defendants (Banks) 11, 12, 13 and 14 in consortium led by the applicant granted Funded Working Capital of Rs.315 crores (out of which applicant funded Rs.90 crores). It is stated that the 1st defendant’s Board passed a resolution to avail the enhanced credit facilities of Rs.315 crores by Board Resolution dated 05.02.2010 and to execute necessary documents by the authorized representatives. It is also stated that the 1st defendant executed Working Capital Consortium Agreement, Joint deed of hypothecation, Hypothecation Agreement, omnibus counter guarantee and Interse agreement on 9.2.2010 in favour of applicant, defendant (bank) Nos.11, 12, 13 & 14. It is further stated that the defendants 2 and 3 executed guarantee agreement and undertaking by personal guarantors on 9.2.2010. It is further stated that the 3rd defendant executed a declaration and undertaking dated 15.02.2010 for creation of equitable mortgage on the Item I of the OA schedule property and a Memorandum of Entry No.1231 was executed on 15.05.2010.

9. It is also the case of the applicant that at the request of the 1st defendant the Working Capital Credit Facility was enhanced from Rs.90 crores to Rs.175 croresby the applicant vide its sanction letter dated 05.04.2010 and 1stdefendant’s Board passed a resolution to avail the enhanced credit facilities of Rs.175 crores by Board Resolution dated 06.04.2010 and to execute necessary documents by the authorized representatives. It is stated that the 1st defendant executed loan documents on 8.4.2010 viz., Facility Agreement, Deed of Hypothecation and Omnibus counter guarantee. It is also stated that the 2nd and 3rd defendants executed guarantee agreements and undertakings on 08.04.2010.

10. It is the case of the applicant that at the request of the 1st defendant by letter dated 20.10.2010, the facility of Bid Bond Guarantee of Rs.60 crores was cancelled, and the revised Working Capital Credit Facility was Rs.115 crores.

11. It is stated that the applicant bank and defendant Nos.10, 11, 12, 14 and 15 formed a consortium lead by applicant bank, hereinafter referred to as IDBI Consortium, at the request of the 1st defendant enhanced the Working Capital Credit Facilities from Rs.315 to Rs.700 crores.

12. It is stated that at the request of the 1st defendant the applicant bank enhanced the Credit Facilities from Rs.90 crores to Rs.115 crores and the 1st defendant’s Board passed a resolution to avail the enhanced credit facilities of Rs.115 crores and to executed necessary documents by the authorized representatives of the 1st defendant. It is also stated that the 1st defendant on 10.02.2011 executed various loan documents for the said limit viz., Working

Capital Consortium Agreement, Joint Deed of Hypothecation, Interse Agreement and Omnibus Counter Guarantee Agreement. It is further stated that the 2nd defendant executed guarantee agreement and undertaking on 23.3.2011 and the 3rd defendant executed guarantee agreement and undertaking on 10.2.2011. It is stated that the 3rd defendant executed a declaration cum undertaking dated 20.07.2011 for creation of equitable mortgage over the Item I schedule property and was entered in Entry No.1249 on 21.07.2011.

13. It is stated that at the request of the 1st defendant the applicant enhanced the credit facilities from Rs.115 crores to Rs.295 crores vide sanction letter dated 26.5.2011 (interchangeability has been permitted from BG Limit to LC limit to the extent of Rs.80 crores). It is also stated that the 1st defendant passed a Board Resolution on 30.05.2011 to avail the enhanced credit facilities of Rs.295 crores and to execute necessary loan documents by the authorized representatives of the 1st defendant. It is further stated that the 1st defendant on 31.05.2011 executed various loan documents viz., Facility Agreement, Deed of Hypothecation and Omnibus Counter Guarantee and the 2nd defendant executed guarantee agreement and undertaking by personal guarantor on 31.5.2011 and the 3rd defendant executed guarantee agreement and undertaking by personal guarantor on 13.06.2011. It is also stated that a declaration and undertaking dated 29.02.2012 for creation of equitable mortgage over Item 1 properties was also executed and a Memorandum of Entry No.1265 was executed on 1.3.2012.

14. It is stated that at the request of the 1st defendant the Consortium Limit was enhanced from Rs.700 crores to Rs.1130 crores and 1st defendant’s board passed a resolution to avail the enhanced credit facilities and 1st defendant also executed necessary loan documents on 1.6.2012 viz., Supplemental Working Capital Consortium Agreement, Supplemental Joint deed of hypothecation, Omnibus Counter Guarantee and Supplemental interse agreement. It is stated that the 3rddefendant executed guarantee agreement on 1.6.2012 and undertaking by personal guarantor on 2.6.2012 and similarly the 2rd defendant executed guarantee agreement and undertaking on 7.6.2012. It is stated that the 2nd defendant executed a declaration and undertaking dated 02.07.2012 for creation of equitable mortgage and related to mortgage by deposit of title deeds on its leasehold land mentioned in schedule of properties in favour of the applicant and the same recorded in the Memorandum of Entry 1271 dated 02.07.2012. It is also stated a declaration and undertaking dated 20.03.2013 for creation of equitable mortgage in favour of IDBI Consortium on its immovable property at Item 1 of the schedule and the Memorandum of Entry No.1284 was executed on 21.03.2013.

15. It is stated that as the project/s under implementation and / or the operations of Neueon Towers Ltd., have come under strain due to various internal and external reasons, the 1st defendant requested for debt restructuring and hence the proposal for restructuring was refereed to the Corporate Debt Restructuring Forum, a non-statutory voluntary mechanism set up under the aegis of the RBI for the efficient restructuring of Corporate Debt (hereinafter referred to as CDR) and the CDR Empowered Group at its meeting held on 25.03.2013 approved the restructuring package in terms of which the then Existing Finance Assistance was to be restructured as per Letter of Approval dated 28.3.2013 of the CFR Cell.

16. It is stated that the applicant therefore issued the LOI vide their letter dated 28.03.2013 for Debt Restructuring Package under CRD Mechanism to the 1st defendant as follows: - (a) The existing term loan outstanding of Rs. 4.50 Crore as on COD is Rescheduled and payable in 40 structured monthly installments commencing from 31.10.2014 and ending on 31.01.2018 after a moratorium of 24 months. And the interest rate is BBR + 150 bps p.a from Cut-off date till 30.09.2014 and BBR + 450 bps p.a. Interest on term loan shall be serviced regularly from 01.10.2012.

(b) Conversion of irregularity in working capital limits into Working Capital Term Loan (WCTL) of Rs. 193.23 Crore. Repayable in 90 structured monthly installments from 31.10.2014 ending on 31.03.2011 after a moratorium of 24 months. BBR _ 50 bps. P.a. from Cut-off date till 30.09.2014 and BBR + 500 bps p.a, subsequently Interest on WCTL for first 24 months from COD shall be funded and converted into WCTL.

(c) Conversion of Interest Overdue on Term Loan & Working Capital including LC aggregating Rs. 1.53 Crores as on COD into FITL-I. Rescheduled in 66 structured monthly installments from 31.10.2014 and ending on 31.03.2020, after a moratorium of 24 months. BBR _ 50 bps. P.a. from Cut-off date till 30.09.2014 and BBR + 500 bps p.a, subsequently Interest on FITL-I will be serviced regularly by the Company throughout the tenure of the loan.

(d) Conversion of Interest accumulated on WCTL, from COD till 30.09.2014 aggregating Rs. 42.25 Crores, into FITL-II. Rescheduled in 66 structured monthly installments from 31.10.2014 and ending on 31.03.2020, after a moratorium of 24 months. BBR _ 50 bps. P.a. from Cut-off date till 30.09.2014 and BBR + 500 bps p.a, subsequently Interest on FITL-II will be serviced regularly by the Company throughout the tenure of the loan.

(e) The Working Capital limits has been renewed from Rs. 295 Crores to Rs. 213.85 Crores. Out of Rs. 213.85, Fund based in the nature of Cash Credit is Rs. 156.17 Crores and Non Fund based LC is Rs. 28.84 Crores and Bank Guarantee is Rs.28.84 Crores.

(f) The Total Credit facilities revised & enhanced in the CDR package is Rs. 455.36 crores.

17. It is stated that with respect to the CDR Package, the various documents have been executed among the parties viz., Master Restructuring Agreement dated 29.03.2013, has been executed between the Defendant No. 1 & IDBI Consortium, including the CDR packages of the Applicant Bank as mentioned above, Trust and Retention Account Agreement dated 29.03.2013, defendants 2 and 3 executed deed of person al guarantee and undertaking by personal guarantor on 29.03.2013, Undertaking cum declaration by STL dated 22.05.2013, undertaking by personal guarantor i.e., 2nd and 3rd defendant dated 22.05.2013, Supplemental inter se agreement dated 22.05.2013 executed among all CDR Lenders, Supplemental Working Capital Consortium Agreement dated

22.05.2013, Supplemental Joint Deed of Hypothecation executed dated 22.05.2013, Supplemental Omnibus Counter Guarantee Agreement dated 22.05.2013 and guarantee agreements dated 22.05.2013 by defendants 2 and 3.

18. It is also stated that the defendants 2 to 9, pledged their 3,83,75,176 shares of the 1st defendant company to the IDBI Consortium vide Agreement for pledge of share dated 19.08.2013, for securing the Credit Facilities sanctioned by the IDBI Consortium. It is also stated that a declaration and undertaking dated 22.08.2013 for creation of Equitable Mortgage in favour of Consortium Lenders on Item No.1 of schedule property and a Memorandum of Entry No.1286 was executed on 23.08.2013.

19. It is stated that once again at the request of the First Defendant, the IDBI Consortium enhanced the Working Capital Credit Facility to Rs.1020.25 Crore(Rs.275 crores granted by IDBI) vide Sanction Letter dated 10.11.2014 to the First Defendant and to secure the same the 1st defendant on 12.3.2015 executed Working Capital Consortium and on 16.3.2015, Supplemental Joint deed of hypothecation and Omnibus Counter Guarantee Agreement. It is also stated that the 2nd and 3rd defendant executed guarantee deed 14.3.2015 and 16.3.2015 respectivelyfor a sum of Rs. 1870.33 Crores, out of which, the Rs.516.51 crores have been funded by the Applicant Bank. It is further stated that a deed of Accession dated 16.03.2015 was executed among Sujana Towers Ltd, Andhra Bank and IDBI Bank Ltd and a deed of accession dated 16.3.2015 was executed among Sujana Towers Ltd, UCO Bank and IDBI Bank Ltd. It is stated that a supplemental agreement for pledge of shares dated 16.4.2015 was also executed. It is also stated that the personal guarantors i.e., 2nd and 3rd defendant on 16.3.2015 executed undertaking for personal guarantors. It is further stated that the 1st defendant’s Board passed a resolution dated 14.11.2015 to the extent of equitable mortgage in respect of the company’s lease hold rights and their own properties described in the schedule to the OA and Joint Mortgage by deposit of title deeds by way of constructive delivery by 1st defendant with respect to the schedule properties was also made vide Entry No.66 and 66 dated 27.11.2015. It is stated that a declaration and undertaking dated 27.11.2015 for creation of equitable mortgage in respect of the properties viz., land admeasuring 2 acres 25 Cents comprised Survey No. 172 A, Plot No 128 part of Bollaram Industrial Development Area, Jinnaram Mandal Medak Dist, Andhra Pradesh and land admeasuring 2 acres 25 cents comprised in Survey No. Plot No 10-12, Survey No 172 /Survey No. 172/EE, U, UU/ Plot No. 9, Survey No. 172/EE, U, UU situated at IDA Bollaram, Bollaram Village, Jinnaram Mandal Medak Dist, Andhra Pradesh.

It is the case of the applicant that it disbursed the Sanctioned Loan Amounts as per the loan agreements/documents and CDR packages, however, the 1st defendant defaulted in repayment and failed and neglected to repay the dues and committed other defaults in observing the conditions of the CDR packages, Loan Agreements and Supplemental Agreementsand Sanction Letters.

21. It is stated that due to non-compliance of the repayment terms as stipulated in the CDR package, the loan account of the 1st defendant was declared as NPA on 30.09.2015 and subsequently it has been decided by Consortium led by IDBI

Bank to exit from the CDR package offered to the 1st defendant, which after reference to CDR EG was approved in its meeting dated 27.9.2016.

22. It is stated that the Name of the 1stDefendant changed from Sujana Towers Limited to Neueon Towers Limited and the Certificate of Incorporation pursuant to change of name was issued on 04.10.2016.

23. It is also stated that the applicant bankalong with other members of the consortium (hereinafter referred to as consortium), has been in discussions with the Borrower for resolution of the NPA issue and various options like sanction of limit for Export Orders / Slump Sale of Assets / Change in Management were explored. However, no concrete action with regard to regularization of the NPA accounts have emerged. It is further stated that in view of lack of progress in options explored for resolution of NPA account, the 1st defendant was advised to repay to IDBI Bank, the principal amount of the Loan, in accordance with the amortization schedule contained therein. It is also stated that the 1st defendant was also advised to pay to IDBI Bank, interest on the principal amounts of the Loan outstanding from time to time, at the rate and in the manner contained in the Loan Agreement and the 1st defendant is required to pay the applicant bank, interest on the principal amounts of the Loan outstanding from time to time, at the rate and in the manner contained in the Master Restructuring Agreement.

24. It is stated that in terms of the Restructuring Package sanctioned by CDR Cell and as set out in the Letter of Approval No. BY.CDR (PMJ)/No. 1220/2012-13 dated 28.03.2013 & Maser Restructuring Agreement dated 29.03.2013 and other

relevant documents, the 1st defendant agreed to close the Loan availed fromL&T Infrastructure Finance Co. Ltd and create first mortgage and charge on all immovable properties, present and future, located at Survey No. 321, TurkalaKhanapur (V), Hatnur (M), Sanga Reddy dist. 502 296, Telangana – India in favour of Lenders under consortium with IDBI Banks as Lead, however, the First Defendant has failed and neglected to create such first mortgage and charge in favour of Lenders under consortium with IDBI Bank as Lead.

25. It is stated that since the 1st defendant committed defaults in payment of principal amounts, interest and monies and adhering to the terms, the applicant bank issued a recall notice dated 5.3.2018 demanding the defendants 1, 2 and 3 to to create first mortgage and charge on all your immovable properties situate at Survey No. 321, TurkalaKhanapur (V), Hatnur (M), Sanga Reddy dist. 502 296, Telangana – India forthwith, in favour of Lenders under consortium with IDBI Bank as Lead immediately substitute the Bank Guarantees, issued by IDBI Bank for the aggregate limit of Rs. 4.85 crore as on 1.3.2018 with the bank guarantee/letters of credit issued by any other bank and arrange to return the said Bank Guarantees/Letters of Credit, in original (duly discharged by the Beneficiaries) to IDBI Bank or in the alternative to deposit with IDBI Bank, a sum of Rs. Rs. 4.85 crore towards the said Bank Guarantees to enable IDBI Bank to mark lien on the same during the validity period of the said Bank Guarantee/Letters of Credit and also to repay a sum aggregating to Rs.761.75 crores together with further interest thereon with effect from 2.3.2018 to applicant.

26. It is the case of the applicant that despite the said notices the defendants 1, 2 and 3 did not come forward to clear the outstanding dues and hence this application.

27. 1st defendant filed reply statement stating the 2nd defendant has already resigned from the Board of the 1st defendant Company on 5.10.2014 and this OA has been filed by the applicant without verifying this fact and hence the same is inter alia unsustainable as against the 2nd defendant. It is contended that the OA is not maintainable either in law or on facts and the 1st defendant is not liable to pay any amount to the application. It is also contended that the claim is barred by limitation and the OA is filed without any valid acknowledgement of liability from the 1st defendant and the reliefs sought for by the applicant are misconceived and wholly untenable and unsustainable. It is further contended that the documents relied upon do not substantiate any of the allegations and averments made by the applicant since the applicant had fabricated the documents by filling blank signed documents for the purpose of saving limitation.

29. It is stated that the registered office of the 1st defendant company is in the State of Telangana and hence this application is not maintainable before this Tribunal. It is also stated that the 1st defendant had availed certain credit facilities including Working Capital facilities from applicant bank and they had executed certain unfilled papers provided by the applicant and there have been several irregularities in the procedure and steps taken by the applicant under the RBD Act.

30. It is stated that the 1st defendant was having huge turnover and was prompt in all its commitments with various banks and financial institutions and had a good relation with applicant bank. It is stated that the applicant had obtained signatures from the defendants 1, 2 and 3 in unfilled blank documents and have now used them for the purpose of filing this OA.

31. It is also stated that the financial assistances availed by the 1st defendant is time barred as the same were not regularized by valid documents and that the claim of the applicant is erroneous, exorbitant and hence are legally and factually untenable. It is stated that the applicant has charged usurious interest. It is stated that since the principal loan is time barred the personal guarantees extended by others on behalf of the 1st defendant are also unsustainable and the OA is liable to be dismissed.

32. It is further stated that the statement of accounts by the applicant is not proper and also not supported by valid certificates. It is stated that the requests of the 1st defendant to furnish statement of accounts has not been acted upon, from which it is inferred that the applicant has not given credit to various payments made by the 1st defendant. Thus submitting the 1st defendant prayed for dismissing the OA.

33. Defendant Nos. 2 to 10, 14 and 16 are set ex-parte on 25.03.2019.

34. The 11th defendant filed reply statement stating therein that this defendant has been made as a party to the application in as much as this defendant holds pari passu charge in respect of some of the properties mortgaged in favour of the applicant bank by the 1st defendant. It is stated that the defendants 1 to 3 also availed credit facilities from M/s UCO Bank, M/s Andhra Bank, M/s Export Import Bank of India, M/s Central Bank of India, M/s Punjab National Bank, M/s Edelweiss Asset Reconstruction Co., Ltd., and further that this defendant, applicant bank and UCO Bank and other lender banks formed a consortium for the credit facilities given to the 1st defendant. It is stated that the 1st defendant availed credit facilities by way of term loan of Rs.75 crores by executing necessary agreements for the same and the original title deeds of the properties which are given as security for this defendant stands as pari passu charge along with the applicant bank as the 1st defendant availed credit facilities with applicant bank by depositing the title deeds of the property. It is also stated that the 1st defendant company entered into Working Capital Consortium Agreement with applicant as well as other consortium letter. It is further stated that this defendant has independently filed OA No.919/2018 for recovery of a sum of Rs.265,85,19,471.35p and the same is pending on the file of this Tribunal. It is stated that this defendant holds pari passu charge over the schedule properties along with the applicant and other lender banks. Thus submitting the defendant prayed for taking into account the claim of the 11th defendant and pari passu charge held by it along with the applicant bank over the schedule properties and pass suitable orders in the OA.

35. The 12th defendant filed reply statement contending therein that this defendant along with defendants 10, 11, 14, 15 and Karnataka Bank Limited (who has since assigned its facilities to 13th defendant) have sanctioned various facilities to the

1st defendant. It is stated that this defendant hold first pari passu charge holder over the various assets with the applicant and defendants Nos.10, 11 and 13 to

15. It is stated that this defendant has also filed a OA No.15 of 2019 before this Tribunal for recovery of a sum of Rs.42,19,20,233.75p from the 1st defendant. Thus submitting prayed to allow the OA as pari passu charge holder along with the applicant and defendant Nos.10, 11 and 13 to 15.

36. The 13th defendant filed reply statement contending that the assignors of this defendant have also granted huge financial facilities to the 1st defendant and as such are also one of the secured creditors holding pari passu charge on the current assets and the properties mortgaged by the 1st defendant. It is stated that the 1st defendant approached the Karnataka Bank (assignor bank) for availing certain facilities in the form of Working Capital Term Loan for a sum of Rs.15 crores on 6.7.2007 and for availing the said facility several loan documents were executed and defendants 2 and 3 executed personal guarantees. It is stated that the applicant executed a consortium agreement on 5.11.2009 with other national banks who are also the proforma defendants 10 to 12 and 14 & 15. It is also stated that subsequently another loan was also sanctioned for a sum of Rs.25 crores to the 1st defendant on 14.12.2010 and the 1st defendant executed necessary loan documents. It is also stated that the Assignor Bank entered into a Working Capital Consortium Agreement on 9.2.2010 along with other lends and defendants 2 and 3 executed guarantee agreements on 9.2.2010 and the Assignor Bank also executed Omnibus Counter Guarantee Agreement with the applicant on 8.4.2010.

37. It is stated that towards availing the credit facilities from Karnataka Bank (assignor bank) the 1st defendant extended the security by creating an equitable mortgage on the properties already deposited with the applicant bank thereby creating pari passu charge in favour of this defenaant. It is also stated that a further sum of Rs.16.47 crores towards Working Capital Term Loan, a sum of Rs.3.62 Crores towards FITL and Rs.3.46 crores towards Letter of Credit and Bank Guarantee on 30.4.2013. It is stated that a Term Loan Agreement for the above disbursements was also executed by the 1st defendant in favour of assignor bank on 15.4.2013 and the defendants 2 and 3 executed personal guarantees and a letter of creation of joint mortgage was executed by all the lenders on 27.8.2013.

38. It is also stated that again a sanction letter for Overdraft facility of Rs.34.68 crore, letter of credit facilities for Rs.5.54 crores and bank guarantee facilities for Rs.5.54 crores was issued in favour of the 1st defendant. It is stated that towards the said facilities Omnibus Counter Guarantees were executed by defendants 2 and 3. It is also stated that a further amount of Rs.2.20 crore was sanction on 28.9.2015 by the assignor bank and personal guarantees were executed by defendants 2 and 3 on 28.9.2015 and a hypothecation agreement was also executed. It is also stated that a Joint Lenders meeting was held to discuss various amounts sanctioned and to create pari passu charge on 29.12.2005 and the defendants 1 to 3 acknowledged the debt of Rs.20,09,00,000/- and apart from that a Share Pledge Agreement for 100% promoters share was executed on behalf of the lenders by defendants 5 to 9. It is stated that the assignor bank is

having pari passu charge over the assets hypothecated and mortgaged and deposited by creating equitable mortgage with the applicant bank as lead bank who holds security on behalf of the other lenders as well.

39. It is stated that since the 1st defendant defaulted in repayment, 1st defendant became liable to pay the assignor bank a sum ofRs.89,02,46,812.77p together with interest and other charges and this defendant has filed OA No.917 of 2018 and the same is pending on the file of DRT-I Hyderabad. It is stated that the amount payable by the 1st defendant as on 28.2.2019 is Rs.104,82,27,675/- Thussubmitting the defendant prayed for allowing the OA and order sale of the schedule properties.

40. 15th defendant filed reply statement contending that the applicant cannot seek exclusive charge over the movable and immovable properties as well as pledged shares since the defendants 1 to 3 had offered the same on pari passu charge in favour of applicant bank, Exim Bank, Karnataka Bank Ltd., UCO Bank, Central Bank of India, Andhra Bank and Punjab National Bank for restructuring package approved by Corporate Debt Restructuring cell on 25.3.2013. It is stated that the 1st defendant had availed a sum of Rs.402.47 crores out of the sanctioned limit of Rs.1958.51 crores from the 15th defendant in terms of 1st sanction letter dated 14.9.2010 and last sanction letter dated 23.12.2014. It is also stated that to secure the repayment of loan amount, the 1st defendant as borrower and the defendants 2 and 3 as guarantors had created charge on all fixed and current assets of the company both present and future limits which shall be shared on pari passu basis with all lender banks. It is further staetd that the account had become irregular due to slow down in the infrastructure and telecom sector and further more the 1st defendant had suffered cancellation of license by the telecom sector. It is further stated that the other factors include non availability of iron ore, unrest situation in the Telangana agitation, power supply problems and volatility in the raw material prices. It is stated that the loan account was classified as NPA on 31.10.2015 and the total dues as on 30.09.2018 payable by the 1st defendant is Rs.599.07 cores. Thus submitting it is prayed that OA be allowed taking into consideration the fact that the 15th defendant is also having pari passu charge over the secured assets.

41. The applicant bank filed its proof affidavit along with 133 documents, which are marked as Exhibits A-1 to A-133, the details of which are as under: - S. No. Date Description of Documents Exhibit Nos.

1. 10.04.2007 Scheme of Arrangement & Demerger Order of the First Defendant. A1

2. A2

3. 19.06.2008 Sanction Letter for Rs. 50 Crores A3

4. 20.06.2008 Board Resolution of the First Defendant A4

5. 21.06.2008 Facility Agreement A5

6. 21.06.2008 Agreement of Hypothecation of Goods and assets A6

7. 21.06.2008 Guarantee Agreements executed by Shri. G. Srinivasa Raju A7

8. 21.06.2008 Guarantee Agreements executed by Shri. Y.S.Choudary A8

9. 21.06.2008 Undertaking by Personal Guarantor G Srinivasa Raju A9

10. 21.06.2008 Undertaking by Personal Guarantor Y S Chowdary A10

11. 13.12.2008 Declaration and Undertaking A11

12. 15.12.2008 Memorandum of Entry No. 1175 A12

13. 11.03.2009 Sanction Letter for enhance to Rs. 90 Crores A13

14. 11.03.2009 Board Resolution for enhance Rs. 90 Crores A14

15. 11.03.2009 Supplemental Facilities Agreement A15

S. No. Date Description of Documents Exhibit Nos.

16. 11.03.2009 Supplemental Deed of Hypothecation A16

17. 11.03.2009 Omnibus Counter Guarantee A17

18. 11.03.2009 Guarantee Agreements executed by Shri. Y.S.Choudary A18

19. 11.03.2009 Guarantee Agreements executed by Shri. G. Srinivasa Raju. A19

20. 11.03.2009 Undertaking by Personal Guarantor G Srinivasa Raju A20

21. 11.03.2009 Undertaking by Personal Guarantor Y S Chowdary A21

22. 05.11.2009 Working Capital Consortium Agreement A22

23. 05.11.2009 Joint Deed of Hypothecation A23

24. 05.11.2009 Hypothecation Agreement A24

25. 05.11.2009 Omnibus Counter Guarantee A25

26. 05.11.2009 Inter se Agreement executed between the Consortium Lenders A26

27. 05.11.2009 Guarantee Agreements executed by Shri. Y.S.Choudary A27

28. 05.11.2009 Guarantee Agreements executed by Shri. G.Srinivasa Raju A28

29. 16.11.2009 Undertaking by Personal Guarantor G

A29

30. 16.11.2009 Undertaking by Personal Guarantor Y S Chowdary A30

31. 05.02.2010 Board Resolution of the First Defendant A31

32. 09.02.2010 Working Capital Consortium Agreement A32

33. 09.02.2010 Joint Deed of Hypothecation A33

34. 09.02.2010 Hypothecation Agreement A34

35. 09.02.2010 Omnibus Counter Guarantee A35

36. 09.02.2010 Inter se Agreement A36

37. 09.02.2010 Guarantee Agreements executed by Shri. Y.S.Choudary A37

38. 09.02.2010 Guarantee Agreements Shri. G. Srinivasa Raju. A38

39. 09.02.2010 Undertaking by Personal Guarantor G

A39

40. 09.02.2010 Undertaking by Personal Guarantor Y S Chowdary A40

41. 05.04.2010 Sanction Letter enhance Credit Limit from Rs. 90 Crores to Rs. 175 Crores. A41

42. 06.04.2010 Board Resolution of the First Defendant A42

43. 08.04.2010 Facility Agreement A43

44. 08.04.2010 Deed of Hypothecation A44

S. No. Date Description of Documents Exhibit Nos.

45. 08.04.2010 Guarantee Agreements executed by Shri. Y.S.Choudary A45

46. 08.04.2010 Guarantee Agreements executed by Shri. G. Srinivasa Raju A46

47. 08.04.2010 Undertaking by Personal Guarantor G Srinivasa Raju A47

48. 08.04.2010 Undertaking by Personal Guarantor Y S Chowdary A48

49. 08.04.2010 Omnibus Counter Guarantee A49

50. 15.05.2010 Declaration and Undertaking A50

51. 15.05.2010 Memorandum of Entry No.1231

A51

52. 20.10.2010 Revised Sanction from Rs. 175 Crores to Rs. 115 Crores A52

53. A53

54. 10.02.2011 Working Capital Consortium Agreement A54

55. 10.02.2011 Joint Deed of Hypothecation A55

56. 10.02.2011 Inter Se Agreement A56

57. 10.02.2011 Omnibus Counter Guarantee Agreement A57

58. 10.02.2011 Guarantee Agreement executed by Shri. G. Srinivasa Raju. A58

59. 23.03.2011 Guarantee Agreement executed by Shri. Y.S. Chowdary. A59

60. 10.02.2011 Undertaking by Personal Guarantor G Srinivasa Raju A60

61. 23.03.2011 Undertaking by

Chowdary A6A61

62. 20.07.2011 Declaration and Undertaking A62

63. 21.07.2011 Memorandum of Entry No. 1249 A63

64. 26.05.2011 Sanction Letter enhance from Rs. 115 Crore to Rs. 295 Crore A64

65. 30.05.2011 Board Resolution of the First Defendant A65

66. 31.05.2011 Facility Agreement A66

67. 31.05.2011 Deed of Hypothecation A67

68. 31.05.2011 Guarantee Agreements executed by Shri. G. Srinivasa Raju. A68

69. 13.06.2011 Guarantee Agreements executed by Shri. Y.S.Chowdary A69

70. 31.06.2011 Undertaking by Personal Guarantor G

Aa70

71. 13.06.2011 Undertaking by Personal Guarantor Y S Chowdary A71

72. 31.05.2011 Omnibus Counter Guarantee A72

S. No. Date Description of Documents Exhibit Nos.

73. 29.02.2012 Declaration and Undertaking A73

74. 01.03.2012 Memorandum of Entry No.1265 A74

75. 31.05.2012 Board Resolution of First Defendant A75

76. 01.06.2012 Supplemental Working Capital Consortium Agreement A76

77. 01.06.2012 Supplemental Joint Deed of Hypothecation A77

78. 01.06.2012 Omnibus Counter Guarantee A78

79. 01.06.2012 Supplemental Interse Agreement A79

80. 07.06.2012 Guarantee Agreements executed by Shri. Y.S.Chowdary A80

81. 01.06.2012 Guarantee Agreements executed by Shri. G. Srinivasa Raju. A81

82. 01.06.2012 Undertaking by Personal Guarantor G

A82

83. 07.06.2012 Undertaking by Personal Guarantor Y S Chowdary A83

84. 02.07.2012 Declaration and Undertaking A84

85. 02.07.2012 Memorandum of Entry 1271 A85

86. 20.03.2013 Declaration and Undertaking A86

87. 21.03.2013 Memorandum of Entry 1284 A87

88. 28.03.2013 Letter of Approval No. BY.CRD (PMJ) / No.

A88

89. 28.03.2013 CDR Package Letter A89

90. 29.03.2013 Master Restructuring Agreement A90

91. 29.03.2013 Trust and Retention Account Agreement A91

92. 29.03.2013 Deed of Personal Guarantee executed by G. Srinivasa Raju & Y.S. Chawdary A92

93. 29.03.2013 Undertaking by Personal Guarantor G. Srinivasa Raju &Y.S.Chowdary A93

94. 22.05.2013 Undertaking cum declaration by STL A94

95. 22.05.2013 Undertaking by Personal Guarantor G

A95

96. 22.05.2013 Undertaking by Personal Guarantor Y S Chowdary A96

97. 22.05.2013 Supplemental inter se agreement executed among all CDR Lenders A97

98. 22.05.2013 Supplemental Working Capital Consortium Agreement A98

99. 22.05.2013 Supplemental Joint Deed of Hypothecation executed A99

100. 22.05.2013 Supplemental Omnibus Counter Guarantee Agreement A100

101. 22.05.2013 Guarantee Agreement executed by Y.S. A101

S. No. Date Description of Documents Exhibit Nos. Chowdary

102. 22.05.2013 Guarantee Agreement executed

by G. Srinivasa Raju A102

103. 19.08.2013 Agreement for pledge of share A103

104. 22.08.2013 Declaration & Undertaking A104

105. 23.08.2013 Memorandum of Entry 1286 A105

106. 10.11.2014 Sanction Letter for Rs. 275 Crores. A106

107. 12.03.2015 Board Resolution of the First Defendant A107

108. 16.03.2015 Working Capital Consortium Agreement A108

109. 16.03.2015 Supplemental Joint Deed of Hypothecation A109

110. 16.03.2015 Omni Bus Counter Guarantee Agreement A110

111. 16.03.2015 Guarantee Deed executed by G Srinivasa Raju A111

112. 14.03.2015 Guarantee Deed executed by Y S Chowdary A112

113. 16.03.2015 Deed of Accession executed among Sujana Towers Ltd, Andhra Bank and IDBI Bank Ltd. A113

114. 16.03.2015 Deed of Accession executed among Sujana Towers Ltd, UCO Bank and IDBI Bank Ltd. A114

115. 23.03.2015 Certificate of Pledge of Share A115

116. 16.03.2015 Undertaking by Personal Guarantor G

A116

117. 14.03.2015 Undertaking by Personal Guarantor Y S Chowdary. A117

118. 14.11.2015 Board Resolution of the First Defendant A118

119. 27.11.2015 Memorandum of entry No. 65 A119

120. 27.11.2015 Memorandum of entry No. 66 A120

121. 27.11.2015 Declaration and Undertaking A121

122. 27.11.2015 Declaration and Undertaking A122

123. 04.10.2016 Certificate of Name Change of the First Defendant A123

124. 22.03.2017 Revival Letter A124

125. 05.03.2018 Recall notice to the First Defendant A125

126. 07.03.2018 Recall notice to the Second & Third Defendant A126

127. 26.10.1999 Sale Deed – 2269/1999 (Item No.1) A127

128. 26.10.1999 Sale Deed –2273/1999(Item No.1) A128

129. 15.12.2011 Lease Deed – 4891/2011(Item No.2) A129

130. 15.12.2011 Lease Deed – 4890/2011(Item No.3) A130

131. 15.12.2011 Lease Deed – 4893/2011 (Item No.4) A131

132. 17.05.2018 Statement of Accounts A132

133. 17.05.2018 Certificate under the Bankers Book Evidence Act A133

42. The 1st defendant filed Counter Proof Affidavit reiterating the contentions made in the reply statement. It is stated that the applicant in the present OA has filed an application before the Hon’ble NCLT Hyderabad Bench under Insolvency and Bankruptcy Code, 2016 vide CP(IB) No.679/7/HDB/2018 in the year 2018 and the Hon’ble Tribunal was pleased to admit the application vide its order dated 03.06.2019 and appointed Dr. Madurai Sundaram Sankar as Insolvency Resolution Professional under the Insolvency and Bankruptcy Code, 2016. Thus submitting prayed to dismiss the entire claim of the applicant.

43. As the defendants other than 1st defendant did not choose to file counter proof affidavit, their chance of filing CPA was closed on 7.7.2021.

44. Heard the Ld. Counselsappearing on behalf of the contesting parties. Perused the records.

45. Having heard the Ld. Counsels for the applicant and after perusing the records, the Tribunal framed the following points for consideration: -

1. Whether the applicant bank has established its claim against the defendants? If so, for what amount?

2. Whether the applicant bank is entitled for pendent lite and future interest, if so, at what rate?

Point No.1

Whether the applicant bank has established its claim against the defendants? If so, for what amount?

46. The applicant bank in its endeavor to establish its claim against the defendant examined its official as AW1 and got marked exhibits Ex.A-1 to A-133. Ld.

Counsel for Applicant placing reliance on the proof affidavit of AW-1, besides Exhibits A-1 to A-133 strenuously contended that the claim of the applicant stands established, as such, the applicant is entitled for a recovery certificate.

47. Ld. Counsel for Applicant Bank would further submit that even as per the Reply Statement filed, the 1stdefendant has not denied availing of credit facility, execution of loan documents and creation of mortgage over the schedule properties in favour of the applicant and as such the said admission is sufficient enough to allow the claim of the applicant. Ld. Counsel would also contend that the defendants 2 to 10 remained ex-parte and did not choose to contest the claim and therefore the claim of the applicant against them remain unrebutted. Ld. Counsel further contended that the contention of the applicant that the amount claimed is not proper, the statement of accounts are not supported by valid certificates, the applicant has claimed usurious interests and the applicant had obtained signatures of defendants 1 to 3 on blank documents and has not utilized the same for the purpose of gaining limitation and for filing the present OA are all false and untenable and added that therefore the claim of the applicant stand unrebutted.

48. Ld. Counsels appearing on behalf of the defendants 11, 12, 13 and 15 would contend that the claim of the applicant is liable to be allowed and prayed for passing orders for sale of the schedule properties and declare their pari passu charge over the said properties.

49. In so far as the contention of the 1st defendant that the registered office of the 1st defendant is in the State of Telangana and therefore the claim filed before this Tribunal is not maintainable is concerned it is to be stated that the applicant bank’s Specialised Corproate Branch is situated in Saidapet, Chennai, which falls under the territorial jurisdiction of this Tribunal and hence the said contention of the 1st defendant fails.

50. In so far as the contention of the applicant that the amount claimed is not proper, the applicant has charged usurious interest and the statement of accounts are not accompanies by proper certificates are concerned it is to be stated that the applicant has filed statement of accounts clearly evidencing the amounts claimed by it and the same is accompanied by certificates under Bankers’ Book Evidence Act and therefore the above averments of the 1st defendant fails.

51. As regards the contention of the 1st defendant that the applicant had obtained signatures on blank documents and the same has been filled later for the purpose of claiming limitation and filing the present OA is concerned it is to be stated that the said contention is the usual contention that every defaulting borrower raises. Further, in view of the judgment of the The Hon’ble DRAT, Mumbai in the matter of Sangli Bank Ltd. Vs. Prabha K.Maheshwari and others reported in MANU/DM/0025/2005 held in paragraph 8 that; “8. The grant of loan as alleged by the Bank and defendant Nos.6 to 10 having signed a guarantee agreement is an admitted position. Their contention is that on 30th July, 1992, defendant Nos. 1 to 5 had sent blank letter of lien, demand note for grant of Rs.30 lacs to the Bank, which indeed, appears to be correct. However, it has to be pointed out that settled legal position is that the person who signs blank standard documents takes responsibility for the same and the plea of non est factum is not available to him”

Hence on the basis of above discussion it is to be held that the said contention of the defendants also fails.

52. Therefore, in the light of the discussion as aforesaid, it is clear that the proof affidavit and the documents filed along with by the applicant remain unchallenged by the defendants 1 to 3. Further, the Tribunal on careful perusal of the unrebutted Proof Affidavit of AW-1 besides Exhibits A-1 to A-133 is fully satisfied that the applicant has established its claim. This point is answered accordingly.

53. During the pendency of the OA the 1st defendant had filed a memo stating therein that an Insolvency Resolution Professional has been appointed in Company Petition No.119 of 2021 filed against the 3rd defendant under Section 95 of the Insolvency and Bankruptcy Act and the Hon’ble NCLT, Hyderabad Bench by its order dated 9.7.2021 was pleased to grant moratorium as against the 3rd defendant and as such the proceedings against the 3rd defendant cannot be proceeded further.

54. During the pendency of the OA the applicant filed a memo stating therein that the Hon’ble NCLT, Hyderabad has initiated Corporate Insolvency Resolution Process against the 1st defendant by its order dated 3.6.2019 made in CP(IB) No.679/7/HDB/2018 and against the 3rd defendant vide its order dated 20.10.2021 made in IA (IBC) No.463/2021 respectively.

Point No.2

Whether the applicant bank is entitled for pendent lite and future interest, if so, at what rate?

55. In terms of Sec. 19 (20) of the RDB Act, the Tribunal has been empowered to pass an order regarding payment of interest from the date on or before which payment of the amount is found due, up to the date of realisation or only payment, as it think fit to meet the ends of justice. Further, Hon’ble Supreme Court, in the judgement (reported in II 2009 BC pg. 696) in the matter of State Bank of India – vs – Sarath Textiles, held that “Sec. 19 (20) of the RDDB & FI Act confers discretion on the Tribunal to award interest on the applicant being as it thinks fit to meet the ends of justice.”. Further, Hon’ble Supreme Court of India in the matter of Central Bank of India – vs – N. Raveendra (reported in 2002 [1] SCC pg. 367) held that “Sec. 34 of CPC confers discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit de-horse notwithstanding the contract between the parties.” Sec. 19 (20) of the RDDB & FI Act is akin to Sec. 34 CPC.

56. While it is the case of the applicant that the applicant bank is entitled for contractual rate of interest till discharge of the entire outstanding dues, however, the defendant would contend that in so far as pendente lite and future interest is concerned, the contractual rate of interest may not be applied. It is to be stated that the claim of the applicant bank includes the rate of interest and other charges payable as per the contract. The Tribunal already held that the applicant bank is entitled for the amount claimed in the OA. As already stated, the Tribunal has awarded contractual rate of interest as claimed by the applicant bank till the date of filing the OA and in view of the fact that the instant loan is a business loan and the lending rate had considerably come down, the Tribunal is of the view that the defendants are entitled for a reduced rate of interest. Therefore, under these circumstances, the Tribunal is inclined to grant pendente lite and future interest @ 14% p.a. simple on the OA claim amount from the date of filing till the date of realization. Point No.2 is answered accordingly.

57. In view of the afore mentioned discussions, the OA is disposed off in the following manner: - (a) OA No.344 of 2018 stands allowed.

(b) Applicant is permitted to realize an an aggregate sum of Rs.777,83,02,686.34p comprising of the followingfrom the defendants 1 to 3 jointly and severally from the date of filing of OA till realization in full, after deducting all the amounts received by them during the pendency of OA, and also by selling the schedule properties and other assets of the defendants 1 to 3: -

(i) A sum of Rs.6,16,09,129/- with further interest at the rate of 14% per annum (simple) being the amount due under Rupee Term Loan Account No.0129673200001847;

(ii) A sum of Rs.290,12,26,001/- with further interest at the rate of 14% per annum (simple) being the amount due under Working Capital Term Loan Account No.0129673200001809.

(iii) A sum of Rs.419,43,97,349.34p with further interest at the rate of 14% per annum (simple) being the amount due under Cash Credit Loan Account No.129655100000569;

(iv) A sum of Rs.60,81,09,703/- with further interest at the rate of 14% per annum (Simple) being the amount due under Funded Interest Term Loan Account No.0129673200001908;

(v) A sum of Rs.1,29,60,504/- being the amount due under Cumulative Redeemable Preference Shares (CRPS).

(b) It is made clear that the liability of the defendants 1 and 3 will be subject to the outcome of the appeal pending before the Hon’ble NCLT, Hyderabad.

(c) It is also made clear that the applicant bank along with defendants 11, 12, 13, 14 and 15 shall have pari passu charges over the secured assets in terms of the restructuring package approved by Corporate Debt Restructuring Cell on 25.03.2013.

(d) If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant Bank, the defendants 2 and 3arepersonally liable for all such amounts due.

(e) Applicant is permitted to realize cost of the proceedings and shall file cost memo within 7 days from the date of the order.

(f) The Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of this final order.

58. Communicate a copy of the order to the parties concerned in terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993. (Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 31st day of May, 2022)

Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI