HDFC Bank Limited vs Ms. V. Ammani on 22 September 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 defendant seeking issuance of a Recovery Certificate for recovery of a sum of Rs.36,67,014.99p with further interest at the rate of 15.75% per annum with monthly rests from the date of filing of this 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 bank for grant of business loan vide application dated 26.06.2018 and considering the said request the applicant sanctioned a loan of Rs.37,00,000/- on 17.07.2018 repayable in 36 Equated Monthly Installments of Rs.1,04,386/- each commencing from 04.08.2018 till 04.07.2022. It is stated that the defendant executed necessary loan and security documents on 17.07.2018.

3. It is also the case of the applicant that the defendant violated the terms and conditions of sanction, committed default in repayments and failed to regularize the loan accounts despite repeated request and hence the applicant issued legal notice dated 30.04.2019 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 reply statement denying each and every averments contained in the application and submit that the application suffers from suppression of facts, misrepresentation and is liable to be dismissed at the threshold. It is stated that applicant does not have a valid cause of action as against the defendant under the said document. It is also stated that the defendant did not accept terms and conditions of Loan Agreement. It is further stated that various amounts remitted by the defendant have not been given credit to.

5. It is contended by the defendant that as per Section 135 of the Indian Contract Act, when the creditor compounds without the consent of the borrower, the liability of the borrower to the creditor stands discharged. It is also contended that as per Section 141 of the Contract Act, the defendant herein is not liable for payment of any money as there are variation in terms of contract without notice to the defendant.

6. It is also contended that the applicant has obtained signatures of the defendant in blank documents and the same have been later utilized for the purpose of filing this OA. It is stated that the relief claimed in the OA are based on presumptions and assumptions and are non-est in law and is therefore liable to be rejected in limine. It is also stated that the statement of account is not supported by proper certificates under Bankers’ Book Evidence Act and the applicant has charged exorbitant interest. Thus contending defendant prayed for dismissing the OA.

7. The applicant bank filed its proof affidavit along with 8documents, which are marked as Exhibits A-1 to A-10, the details of which are as under: - Sl. No. Date Description of Documents Exhibits

1. 19.01.2018 Board Resolution of the Applicant A 1

2. 26.06.2018 Loan Application Form A 2

3. 17.07.2018 Loan Agreement A 3

4. 17.07.2018 Post dated cheque acknowledgement A 4

5. 17.07.2018 Forex Unhedged Exposure Letter A 5

6. 17.07.2018 Declaration submitted by the defendant A 6

7. 30.04.2019 Legal notice A 7

8. 02.05.2019 Proof of service of legal notice A 8

9. 02.05.2019 Returned cover of the legal notice A 9

Sl. No. Date Description of Documents Exhibits

10. Statement of Accounts along with certificates under Bankers’ Book Evidence Act. A10

8. Despite availing sufficient opportunities, the defendant did not choose filed their Counter Proof Affidavit and hence the chance for filing Counter Proof Affidavit was closed on 27.04.2023.

9. Heard the Ld. Counsels for both sides. Perused the records.

10. 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 defendants? If so, for what amount?

11. 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-10. Ld. Counsel for Applicant placing reliance on the proof affidavit of AW-1, besides Exhibits A-1 to A-10 strenuously contended that the claim of the applicant stands established, as such, the applicant is entitled for a recovery certificate.

12. 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. Ld. Counsel would submit that the contention of the defendant that the applicant had got the signatures of the defendant in blank documents and have utilized the same for the purpose of filing this application is a usual ground taken by every defaulting borrower. Ld. Counsel also denied the contention of the defendant that various amounts remitted by them have been given credit to. Ld. Counsel would also contend that the statement of accounts filed is proper and supported by appropriate certificate under Bankers’ Book Evidence Act and Information Technology Act and hence the contention of the defendants regarding the amount claimed cannot be countenanced. 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.

13. Further, the applicant bank has filed the statement of accounts accompanied by certificates under Bankers’ Book Evidence Act and therefore the claim of the defendants that the amount claimed is not proper and supported by documents fails.

14. As regards the contention of the defendant that the defendant was made to sign blank documents and the same have been utilized for the purpose of filing this OA is concerned, it is to be stated that this is a usual stand taken by every defaulting borrower. In this connection it will be pertinent to refer to the decision of 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”

15. In so far as the contention of the defendant that in view of Section 135 and 141 of the Indian Contract Act is concerned, it is to be noted that there is no variation of contract on discharge of the borrower as contended by the applicant.

16. In so far as the contention of the defendant that various amounts remitted by the defendant have not been given proper credit to is concerned, it is to be stated that the defendant has not given the details of the remittances made and hence the said claim of the defendant fails.

17. As rightly contended by the Ld. Counsel for Applicant, barring filing of reply statement, and a Counter Proof Affidavit which is only a verbatim reproduction of the reply statement. The denial of the execution of loan document and the other contention as taken in the reply statement are already dealt with in the previous paragraphs. In view of the same this Tribunal is of the considered opinion that the defence put forth by the applicant is liable to be rejected.

18. 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-10 is 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?

19. 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.

20. 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 subject loan being is a business loan and the lending rate had considerably come down, the Tribunal is of the view that the defendant is entitled for a reduced rate of interest. Therefore, under these circumstances, the Tribunal is inclined to grant pendente lite and future interest @ 9% p.a. simple on the OA claim amount from the date of filing till the date of realization. Point No.2 is answered accordingly.

21. In view of the afore mentioned discussions, the OA is disposed off in the following manner: - (a) TA No. 39 of 2023 stands allowed.

(b) Applicant is permitted to realize an amount of Rs.36,67,014.99p with further interest @9% 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 schedule properties and other assets of the defendant.

(c) If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant, 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 the order.

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

22. 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 22nd day of September, 2023) Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI