CANARA BANK vs M/s. PIONEER BREEDING AND HATCHERIES PRIVATE LIMITED on 19 May 2022

O R D E R

1. This application has been filed under Section 19(1) of the RDDBFI Act 1993 by the Applicant Bank to recover from the defendants a sum of Rs.101,23,81,314.11 (Rupees One Hundred and One Crore Twenty Three Lakhs Eighty One Thousand three Hundred and Fourteen and paise eleven only) along with interest @ 19.50%, 13.75%, 13.75%, 13.75%,13.75%, 13.75% per annum, with quarterly rests from the date of application, till the date of its realization, and also by sale of the charged/ mortgaged properties which are more fully described in the Schedule, with costs.

2. The brief facts of the case are as follows:- 2.1 The 1st Defendant M/s Pioneer Breeding and Hatcheries Private Limited is a Private Limited Company which is engaged in Poultry – Broiler integrating business. D2 is the Managing Director and D3 and D4 are Directors of D1 Company. D5 is a Private Limited Company (sister concern) in which D2 to D4 are Directors.

2.2 On 21.02.2005, D1 approached the Applicant Bank for takeover of loan facilities from ING Vysya Bank, Coimbatore for their Working Capital requirements. At their request Applicant Bank advanced loan facilities up to 3305.31 Lakhs (Rupees thirty Three Crores Five Lakhs and Thirty one Thousand only ) (OCC-Rs.3200 Lakhs + Term Loan -I Rs.37.53 Lakhs + Term Loan II Rs.67.78 Lakhs ) to D1 and took over the loans from ING Vysya Bank Limited. The primary security was the Hypothecation of Schedule A properties ie. Movables, stocks, book debts etc. and also against the security of equitable mortgage of properties mentioned as Item No.s 1 to 24 of Schedule B . The D1 executed Pronote , Cash Credit Agreement and Hypothecation Agreement dated 04.04.2005 in support of the loan transaction. During 3rd month of 2006, D1 availed a temporary limit of Rs.300 Lakhs from the Applicant by executing loan documents dated 15.03.2006 in support of the transaction. During 11th month of 2005, D1 applied for a temporary limit of Rs.300 Lakhs for their working capital requirements and the same was availed by D1 by executing Pronote and Supplemental Agreement dated 29.11.2005. During the 7th Month of 2006, at the request of D1, Applicant reduced a sum of Rs.550 Lakhs from the existing OCC Limit and advanced a fresh Short Term Loan facility of 350 Lakhs and D1 availed the same by executing loan documents dated 12.07.2006 in support of the transaction. During the 12th Month of 2006, at the request of D1, Applicant enhanced the existing OCC Limit to 4650 Lakhs and D1 availed the same by executing loan documents dated 05.12.2006 in support of the transaction. During the 2nd Month of 2007, at the request of D1, Applicant advanced additional OCC Limit of 1025 Lakhs and Pledge Loan of Rs.3000/- Lakhs and D1 availed the same by executing loan documents dated 23.02.2007 & 08.10.2007 in support of the transaction. During the 3rd Month of 2008, at the request of D1, Applicant enhanced the facilities by advancing WCTL limit of Rs.800 Lakhs and Term Loan of Rs.2500/- Lakhs and D1 availed the same by executing loan documents dated 03.04.2008 in support of the transaction.

2.3 The D2 to D4 had executed Guarantee Agreement in favour of the Applicant Bank on 04.04.2005, 12.07.2006, 05.12.2006, 23.02.2007, 08.10.2007 and 03.04.2008 and stood as guarantors for the loan availed by D1. D5 executed Guarantee Agreement in favour of the Applicant Bank on 08.10.2007 and 03.04.2008 and stood as guarantors for the loan availed by D1. Therefore, all the 5 defendants are jointly and severally, liable to repay the loan. The Guarantee executed by D2 and D5 are continuing Guarantee. The D 1 deposited the Title Deeds pertaining to the properties which are more fully described in Item 1 to 20, 23 and 24 of the Schedule 'B' in favour of the Applicant Bank with an intention to create an equitable mortgage over the same and they have confirmed the same through their Memorandum of Agreement / Letter evidencing deposit of title deeds dated 01.06.2005, 21.06.2005,21.08.2005, 12.07.2006, 02.12.2006, 23.02.2007, 08.10.2007 and 03.04.2008. Similarly, D3 deposited the Title Deeds pertaining to the property which is more fully described in Item 21 of the Schedule 'B' & D4 deposited the Title Deeds pertaining to the property which is more fully described in Item 22 of the Schedule 'B' in favour of the Applicant Bank with an intention to create an equitable mortgage over the same and they have confirmed the same through their Memorandum of Agreement / Letter evidencing deposit of Title Deeds dated 21.06.2005, 12.07.2006, 01.12.2006, 23.02.2007,08.10.2007 and 03.04.2008.

2.4 The account became irregular and was classified as Non Performing Asset and initiated action under SARFAESI Act by issuing a demand notice under Sec. 13 (2). However defendants failed to discharge their lability and the outstanding dues are as under:- Sl No. Nature of Account Dues

OCC Account Rs.58,99,16,280.11

TL-II Account Rs. 25,65,589.00

TL Account Rs. 1,29,42,336.00

TL Account Rs. 3,93,77,999.00

TL Account Rs. 8,91,16,729.00

TL Account Rs.27,84,62,381.00

TOTAL Rs.101,23,81,314.11

The D1 availed aforesaid loans with an undertaking to repay the same with interest at 17.5% in respect of OCC loan account and 11.75% in respect of other loan accounts. Defendants failed to repay the amounts in spite of demands. Applicant is also entitled to charge penal interest @ 2% per annum. 2.5 Therefore, the Applicant Bank is entitled to recover the sum of Rs.101,23,81,314.11 (Rupees One Hundred and One Crore Twenty Three Lakhs Eighty One Thousand three Hundred and Fourteen and paise eleven only) along with interest @ 19.50% in respect of the OCC loan account and 13.75% in respect of other loan accounts per annum, with quarterly rests from the date of Application, till the date of its realization, and also by sale of the mortgaged/ hypothecated properties which are more fully described in the Schedule, with costs. Hence, the application.

3. All the Defendants were set ex-parte on 20.09.2012. The Defendants filed IA 410/2015 for setting aside the ex-parte order and the same was allowed on 08.04.2015. Subsequently on 14.12.2021, 19.01.2022 & 28.01.2022, the Defendants were called absent. Further this Tribunal by its order dated 28.02.2022, the Defendants were called absent and they were set ex-parte.

4. The Applicant Bank, in order to prove its claim, has filed Proof Affidavit dated 02.06.2011 executed by one S.Anbukkarasu, Chief Manager of the Applicant Bank and the documents are marked as Exhibits A1 to A 241 in support of its claim in the OA. Subsequently Additional Proof Affidavit dated 24.10.2016 executed by P Saravanan, Chief Manager and Additional Proof Affidavit dated 24.01.2022 were also filed before this Tribunal.

5. During the pendency of the proceedings, all the properties listed in Schedule 'B' , are sold by the Applicant Bank under the SARFAESI Act and part satisfaction of the OA claim were recorded as under:-

Sl No Particulars Property sold (Schedule A & B of the OA) Date of proceedings Part satisfaction recorded

IA No.

Wind Mill together with land mentioned as 23, 24, 1 & 2 06.05.2011 2,21,40,000/-

IA No.

13,14 & 15 25.01.2012 & 20.09.2012 1,05,25,000/-

IA No.

and 22 14.05.2018 3,10,90,000/-

IA No.

3,4,5,6,9,10, 11, 12, 16,17, 18, 19 and 20 29.08.2018 9,25,00,000/-

IA No.

7 and 8 24.04.2019 2,74,00,000/-

TOTAL 18,36,55,000/-

6. A cumulative analysis of both the Proof Affidavit and the documents marked by the Applicant Bank would prove the claim of the Applicant Bank in the OA. The Applicant had sold all the properties mentioned in Schedule 'B' of OA and realized a sum of Rs.18,36,55,000/- and adjusted the same towards the claim in OA.

7. Therefore, the Applicant Bank is entitled for a final order by deducting the amounts already adjusted from the OA claim on the following lines:-

8. The Applicant Bank having recovered a sum of Rs.18,36,55,000/- and the amount is already adjusted towards the liabilities of various loan accounts of the borrower and the interest rate being @ 19.5% per annum in one of the loan accounts and the rate of interest is 13.75% per annum in other loan accounts, this Tribunal considers fit and appropriate to award an interest of 13.75% per annum towards total loan amount due from the borrowers.

9. In the result, in view of the observations made supra, the Applicant Bank is entitled to recover from the Defendants, jointly and severally, a sum of Rs.82,87,26,314.11 (Rupees Eighty Two Crore Eighty Seven Lakhs Twenty Six Thousand three Hundred and fourteen and paise eleven only) along with interest @ 13.75% per annum, from 16.10.2008, the date of filing of application, till the date of its realization, and also by sale of the hypothecated properties which are more fully described in Schedule belonging to D-1 with costs.

10. Therefore, the defendants, jointly and severally, are directed to pay to the Applicant Bank a sum of Rs.82,87,26,314.11 (Rupees Eighty Two Crore Eighty Seven Lakhs Twenty Six Thousand three Hundred and fourteen and paise eleven only) along with interest @ 13.75% per annum, from 16.10.2008, the date of filing application, till the date of its realization, and with costs. On failure to pay the above said debt to the Applicant Bank, the Applicant Bank is directed to bring the hypothecated properties which are more fully described in the Schedule for sale to realize its dues.

11. The Registry is directed to prepare DRC in terms of this final order. The Applicant Bank shall file the memo of costs within 15 days from the date of this order.

12. The Registry is also directed to communicate copies of this order to both the parties as provided in Rule 16 of the Debts Recovery Tribunal (Procedure) Rules 1993, as amended in 2003.

(Dictated to my PA directly on computer and after necessary corrections, signed and pronounced by me in the open Tribunal on this the 19th May 2022)

Sd/-

(M.P.BALASUBRAMANIAN)

PRESIDING OFFICER

SCHEDULE

1. Hatching Eggs, Parent Birds kept in own farms; Parent Birds, Hatching Eggs, Broiler Birds, Feed Stock, Medicines in various contract farms / own farms spread over Tamil Nadu, Andhra Pradesh and Karnataka States

2. Book Debts due to the Company

3. Poultry Equipments, Setters, Incubators and other Plant and Machineries in their Hatcheries and Farms Sd/- (M.P.BALASUBRAMANIAN)

PRESIDING OFFICER