HDFC Bank Limited vs Dr. Anand Kantilal Khakhar on 31 August 2023

FINAL ORDER

1. This application is filed by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 against the defendantseeking issuance of a Recovery Certificate for recovery of a sum of Rs.77,06,182.69p with further interest at the rate of 11.50% per annum with monthly rests from the date of filing of the application till the date of realisation along with costs of the application.

2. It is the case of the applicant that the defendant approached the applicant seeking for a Self Employed Professional Loan and submitted requisite documents vide Loan Application dated 25.10.2018 and considering the said request the applicant sanctioned a loan of Rs.75,00,000/- to the defendant under Loan Account No.62195527. It is stated that said amount was repayable in 60 Equated Monthly Installments of Rs.1,64,942/- per month commencing from 06.12.2018 till 06.11.2023. It is also stated that the defendant executed various loan documents on 30.10.2018.

3. It is also the case of the applicant that the defendant violated the terms and conditions of the sanction, committed default in repayments and failed to regularize the loan account despite repeated request and hence the applicant issued a legal notice on 21.06.2019 calling upon the defendant to clear the outstanding dues. It is stated that despite the said notice the defendant did not come forward to clear the dues and hence the applicant is constrained to file this application for recovery of its legitimate dues.

4. The defendant filed a reply statement stating therein that the funds borrowed from the applicant were invested in setting up a hospital but due to reasons beyond control the same could not function resulting in huge loss to the defendant. It is stated that the defendant was to return the investments made by M/s Polari Banyan Holding Private Limited in M/s Auromed Holding Private

Limited since a case was filed by M/s Polari Banyan Holding Private Limited in the NCLT. It is also stated that the anticipated investment of Rs.22 crores from a new investor for the hospital in January 2019 did not materialize resulting in huge financial crisis. It is further stated that the defendant was working with M/s Apollo Hospitals on a revenue sharing arrangement so that he could settle the debt. It is submitted that his efforts to bring in new investors failed and he was unable to spend adequate time on his professional practice as well. It is contended that the defendant is taking every step to clear the dues by reorganizing his professional practice. It is also contended that the defendant will restart the payment of EMI from 1.8.2020 and will continue to pay and close the account. Thus, submitting the defendant prayed time for settlement of the loan account.

5. The applicant bank filed its proof affidavit along with 9documents, which are marked as Exhibits A-1 to A-9, the details of which are as under: - Sl. No. Date Description of Documents Exhibits

1. 19.01.2018 Board Resolution of the applicant bank A-1

2. 25.10.2018 Loan Application submitted by the defendant. A-2

3. 30.10.2018 Loan Agreement executed by the defendant A-3

4. Post dated cheque acknowledgement letter A-4

5. 30.10.2018 Declaration signed by the defendant A-5

6. 21.06.2019 Legal notice issued by the applicant A-6

7. 22.06.2019 Acknowledgement of the legal notice A-7

8. 22.06.2019 Acknowledgement by the defendant of having received the legal notice A-8

9. Statement of Accounts along with certificates under Bankers’ Book Evidence Act. A-9

6. Despite availing sufficient opportunities, the defendants did not choose filed their Counter Proof Affidavit and hence the chance for filing Counter Proof Affidavit was closed on 06.10.2022.

7. Heard the Ld. Counsel for the Applicant Bank. The defendant was continuously absent. Perused the records.

8. 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 defendant? 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 defendant? If so, for what amount?

9. The applicant bank in its endeavor to establish its claim against the defendant examined its official as AW1 and got marked exhibits Exhibits A-1 to A-9. Ld. Counsel for Applicant placing reliance on the proof affidavit of AW-1, besides Exhibits A-1 to A-9 strenuously contended that the claim of the applicant stands established, as such, the applicant is entitled for a recovery certificate.

10. Ld. Counsel for Applicant Bank would contend that even as per the Reply Statement filed, the defendants have not denied availing of credit facility, execution of loan and security documents and as such the said admission is sufficient enough to allow the claim of the applicant. It is also contended that the defendant except praying for time to clear the dues no ground has been made. It is further contended that the defendant though filed the reply statement, did not choose to file any CPA despite sufficient opportunity and therefore the claim of the applicant stand unrebutted.

11. As rightly contended by the Ld. Counsel for Applicant, barring filing of reply statement, the defendant did not choose to file Counter Proof Affidavit substantiating the pleas taken in reply statement. Here it is to be stated that as per the scheme of adjudication of a claim/counter under the RDB Act, parties shall file their respective affidavits/counter affidavits in support of their claim or counter claim as the case may be and the Tribunal shall on the basis of the affidavits filed, adjudicate and decide the claim/counter claim. Therefore, in the absence of any Counter Proof Affidavit, as rightly contended by the Ld. Counsel for Applicant, the defense put forth by the defendant remain unsubstantiated hence cannot be considered, thus the claim of the applicant stands unrebutted.

12. It is seen that the defendant except praying time for repayment has not disputed or rebutted the claim of the applicant. 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 defendant. Further, the Tribunal on careful perusal of the unrebutted Proof Affidavit of AW-1 besides Exhibits A-1 to A-9is fully satisfied that the applicant has established its claim. This point is answered accordingly.

Point No.2

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

13. 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.

14. 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 and this 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 subject loan being is a business loan and thelending 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 @ 11% p.a. simple on the OA claim amount from the date of filing till the date of realization. Point No.2 is answered accordingly.

15. In view of the afore mentioned discussions, the TA is disposed off in the following manner: - (a) TA No.869 of 2023 stands allowed.

(b) Applicant is permitted to realize an amount of Rs.77,06,182.69p with further interest @11% per annum (simple) from the date of filing of the application till the date of realization in full, from the defendant after deducting all the amounts received by them during the pendency of OA, and also by selling the other assets of the defendants.

(c) It is made clear that the defendant is personally liable for all such amounts due.

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

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

16. 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 August, 2023) Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI