IFCI Limited vs Ms Sakthi Sugars Ltd 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.68,06,80,175/- (Rupees Sixty Eight crores Six Lakhs Eighty Thousand One Hundred Seventy Five only) due in the Financial assistance availed under Rule 23(10) of Sugar Development Fund Rules for meeting the short fall in promoters contribution which their factory is required to meet from its own resources for setting a 35 megawatt power availed by the 1st 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 as per Section 3 of the Sugar Development Fund Act, a fund is to be formed and in pursuant to the rules framed their under loans were sanctioned to Sugar Factories and applicant was made the Nodal Agency for the disbursement, follow up and recovery of the amounts in Sugar Development Fund loans. It is contended that an amount of Rs.38,93,76,400/- was got sanctioned by the 1st defendant on 25.9.2009. The borrower has to execute an agreement and furnish security. It is also stated that a tripartite agreement was executed between the 1st defendant, applicant and the Government of India. It is also stated that similarly another facility of Rs.23,23,20,000/- was also got disbursed on 22.3.2010 and the same has been procured by executing necessary loan documents.

4. In lieu of the amounts so got disbursed hypothecation agreements were executed by the defendant on 10.1.2010 and 17.5.2010 respectively. It is also admitted by the applicant that the 1st defendant had availed terms loans from defendants 2 to 12 and executed deed of hypothecation for securing the loan availed by way of exclusive 2nd charge. It is the further case of the applicant that a collateral security over the 176.45 Acres of property comprising in Kannariruppu village, Meenakshipuram alias Pottakulam village, Mathur village, Karur village and Ulakadaipacheri village of Siva Ganga Taluk on exclusive 2nd charge. Apart from the above a 2nd charge over „C‟ schedule properties were also created. It is admitted that the original title documents of C schedule properties were deposited with 2nd defendant.

5. It is also stated that even though the 1st defendant was obliged to pay back the amount, they failed in doing so and the fact about the defaults were already intimated to other lenders of the 1st defendant. It is also stated that since the repayment was defaulted the applicant is entitled as a nodal agency to recover the amount due in the said facility and as no repayment was forthcoming this TA is filed seeking Recovery of the amount due in the account.

6. The 1st defendant had filed their reply statement contending that the applicant cannot maintain this application under the provisions of RDDB Act or invoke the Jurisdiction of This Tribunal as the applicant is not a bank or and the amount is not a debt. It is the further case of the 1st defendant that the OA is not filed as the lender and only as a agent Government of India. It is further case of the 1st defendant that the authority to institute a legal proceedings is completely absent in the available documents and the principal of “force majeure” applies as defaults occurred due to the rough phase in the business as Sugar exports were banned. It is also stated the 1st defendant had also invested huge amounts and the Indian Sugar Mill Associate had also requested for reschedulment of the facilities and the defendant also offer to settle the account in a phased manner. The 1st defendant also disputing the interest applied.

7. The 2nd defendant had filed their reply statement stating that a term loan was availed for 50 Crores under Government of India‟s scheme and a Paripassu 1st charge was created over the assets plant. The contention of the applicant in respect of the 2nd charge is not disputed by the 2nd defendant a reply statement was filed by 9th defendant were in also the case of the applicant is not disputed. The applicant had filed their proof affidavit in terms of the TA claim. In the meanwhile the debt of the 1st defendant with 3th ,4th ,5th ,6th ,10th ,11th were assigned in favour of ARCIL and the said Asset Reconstruction Company had been substituted in place of respective defendants. Since no steps were taken to bring in the amalgamated bank in place of 8th defendant, the TA against 8th defendant is dismissed.

8. The applicant had let in evidence through AW1 who had filed the proof affidavit in conformity with the pleadings of the TA and got marked Ext.A1 to A12 as requested by the 1st defendant AW1 was also cross examined.

9. No defence evidence was let in by the defendants.

10. Heard, the following issues arise for consideration: -

(i) Whether the Applicant had proved the TA claim?

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

11. The 1st defendant had no dispute as to the availment of the facility execution of tripartite agreement and defaults occurred in the repayment. The main defense put forth by the 1st defendant is that the applicant cannot maintain this application as the subject as the amount due is not a debt. Even though the right of the applicant to seek recovery of the amount is also raised this Tribunal is not inclined to accept the same for the reason that the tripartite agreement empowering the Nodal bank to recover the amount is not under dispute.

12. The applicant‟s right to approach this Tribunal is also to be held in positive as admittedly the applicant is a public financial institution. The next contention as the amount due is not recoverable by approaching this Tribunal is to be considered in the light of the definition of the word debt, which in turn takes in „any liability which is claimed as due from any person by a bank or financial institution‟. Hence in view of the tripartite agreement, empowers the applicant to recover the due amount makes it a „liability‟ which the 1st defendant due from the 1st defendant. In view of the above the contention of the 1st defendant in that regard is also liable to be rejected.

13. The 1st defendant is not disputing the availment of the facility, execution of documents and defaults in repayments.

14. The Applicant evidence remained un-rebutted and hence proved. The documents produced by the Applicant are found to be admissible and are sufficient to prove OA claim. Hence the Applicant is to be found entitled for the OA claim. The OA claim is made within limitation and there is no capitalization of penal interest.

15. The entitlement of the applicant to recover the amount from schedule B and C properties, subject to the 1st charge of the 2nd defendant is also to be upholded in view of the proof as to creation of 2nd charge.

16. In view of the above, the following order is passed: - (a) TA No.811 of 2023 stands allowed.

(b) Applicant is permitted to recover an amount of Rs.68,06,80,175/- (Rupees Sixty Eight crores Six Lakhs Eighty Thousand One Hundred Seventy Five only) with future and pendente lite interest @ 4% simple P.A 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 1st defendant and its assets including the schedule B and C properties subject to the 1st charge of 2nd defendant and also against hypotheca, subject to the 1st charge of defendants 2 to 12.

(c) 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.

11. 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