Indian Overseas Bank vs M/s. Unique Leader Industries Private Limited on 28 March 2024

FINAL ORDER

1. The Application is filed under Section 19 (1) of the Recovery of Debt And Bankruptcy Act, 1993 seeking for issuance of a Recovery Certificate for Rs. 3,93,19,744.42p (Rupees Three Crores Ninety Three Lakhs Nineteen Thousand Seven Hundred Forty for and Forty Two paisa only) due in the credit facilities of Secured Packing Credit Limit, Term Loan and letter of guarantee availed by the defendant.

2. The above TA was originally filed before DRT-I and got transferred to this Tribunal and renumbered as above.

3. The applicant contends that the following credit facilities were availed by the 1st defendant Company and other defendants who are the directors of the 1st defendant company stood as guarantors viz., Secured Packing Credit Limit of Rs.210,00,000/-, Term Loan of Rs.100,00,000/- and Letter of Guarantee of Rs.30,00,000/-.

4. The credit facilities were secured by hypothecation of book debts machineries, vehicle and also by mortgage over schedule properties owned by 1st defendant company. It is also the case of the applicant that the above credit limits were revised into the following facilities viz., Secured Packing Credit Limit of Rs.260,00,000/-, Term loan of Rs.109,00,000/-, Working Capital Term loan of Rs.70,00,000/- and Letter of Guarantee of Rs.3,00,000/-. The said credit facilities were extended on the same securities.

5. The Applicant further contents that despite availing the credit facility by obliging to pay back the amount, the defendants failed in compliance of the same and all the efforts of the Applicant to make the defendants pay back the amount failed despite issuance of a demand notice on 30.7.2018, the applicant is compelled to file this TA seeking recovery of the amount due in the account.

6. The defendants 2, 3 and 4 remind ex-parte were as separate reply statement were filed by defendant 1 and 5 and 6th defendant.

7. Defendant 1 and 5 filed their reply statement contending that the applicant had illegally levied exorbitant interest and it is also stated that the entire amount sanctioned were not released to the borrowers. It is the further case of those defendant that the repayment were prompt from 2011. Another contention taken by the defendants 1 and 5 is that the defendants 2 and 3 were in charge of day today affairs of the company and in the defendant’s 1 and 5 are no way connected with the business.

8. The 6th defendant had filed his reply statement contending that he had resigned from the director ship with effect from 15.6.2017 and the same has been uploaded to Registrar of Companies (ROC). It is further contended by the 6th defendant that no personal guarantee was extended for the revival of the credit facility on 23.5.2016. it is also the case of the 6th defendant that the defaults of the company occurred only after he resigned from the company. Another contention by the 6th defendant is that the guarantee documents were got executed by misrepresentation that too procuring signature in blank documents. The interest as levied and claimed by the applicant is also disputed by 6th defendant. Along with the reply statement the 6th defendant had produced Form DIR 12, evidencing his resignation and also the Company Master Data.

9. The Applicant let in evidence through AW1, filed proof affidavit in conforming with pleading and got marked Ext A1 to A32. The defendants though filed a counter proof affidavit, no documents were produced.

10. Heard, the following issues arise for consideration: - (a) Whether the Applicant had proved the TA claim as against all defendants?

(b) What orders are to be passed? Both these issues are decided together.

11. The Applicant had filed the proof affidavit in conformity with the pleadings in the TA and had produced the loan documents evidencing the disbursement of the same. Even though the defendants 1,5 and 6 are contesting the matter, they have no dispute as to the availement of the credit facility creation of security and defaults occurred in the account. Even though defendants 1 and 5 had disputed the rate of interest applied, nothing was brought out to discredit the claim of the applicant bank.

12. The 6th defendant had taken a contention that he had resigned from the company and is no way liable to make the repayment. Even though the proof as to the resignation is produced no evidence as to communication of the same to applicant bank is produced. Since the 6th defendant is seriously disputing the existence of personal guarantee, this Tribunal had considered the document produced by the applicant in support of their claim. Ext.A26 is the guarantee for cash credit claim to have been executed by the defendants 1 to 6. Clause 9 of the guarantee agreement provides that the same shall be:- ‘continuing guarantee irrespective of any sum or sums which may be paid into the account of the principal at any time during the continuous of guarantee and shall remain in force until cancelled by written authority, the amount then due to be subject to this guarantee and secured thereby” (Emphasis supplied). More over clause 11 provides that any acknowledgment or admission of the principal borrower will be binding on the guarantors.

13. By virtue of the above document the defence set out by 6th defendant is to be discarded. The documents produced by the applicant are found to be admissible and are sufficient to prove the sanctioning, disbursement and the liability of defendants to pay back the amount. The statement of accounts produced by the applicant evidences that the account is in default and the amount as claimed in the OA is outstanding in the account.

14. In view of the above discussions and findings entered in above paragraphs this Tribunal is of the view that the applicant is to be found entitled for the TA claim. It is also evident that the claim is made within the period of limitation and there is no capitalization of penal interest.

15. Taking note of the fact that the TA claim is arrived at by calculating interest at contractual rate, which is on the higher side and that the lending rates had come down substantially, pendente lite and future interest is awarded at simple rate, that too at a reduced rate of 13%.

16. In view of the above, the following order is passed: - (a) TA No.801 of 2023 stands allowed.

(b) Applicant is permitted to recover an amount of Rs.3,93,19,744.42p (Rupees Three Crores Ninety Three Lakhs Nineteen Thousand Seven Hundred Forty four and Forty Two paisa only) with future and pendente lite interest @ 13% simple per annum from the date of filing of the OA/TA till realization, after giving credit to all the amount recovered and received during the pendency of the OA/TA, from the defendants and their assets including scheduled properties. The defendants 2 to 6 are personally liable for the TA claim. I A Recovery Certificate is to be drawn and issued to the recovery Officer to enable recovery of the as per the above terms.

(d) Applicant is allowed to realize cost of the proceeding for which cost memo is to be filed in 7 days’ time from the date of receipt of the copy of the order.

17. Communicate a copy of the order to the parties concerned in terms of section 19(21)(i) of the RDB Act, read with Rule 6 of DRT (Procedure) Rules, 1993. (Dictated to PS, transcribed by him, corrected, signed and pronounced by me in the Open court, this the 28th day of March, 2024)

Sd/- (T.RAJESH)

PRESIDING OFFICER

DRT-II, CHENNAI