Canara Bank vs M/s Gay Tech 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 defendants’seeking issuance of a Recovery Certificate for recovery of an aggregate sum of Rs.25,99,226/- comprising a sum of Rs.12,87,263/- with further interest at the rate of 18.15% per annum with monthly rests being the amount due under Term Loan account and a sum of Rs.13,11,963/- with further interest at the rate of 18.15% per annum with monthly rests being the amount due under Cash Credit Facility from the date of filing of this application till the date of realisation along with costs of the application and for sale of schedule properties.

2. The subject matter of the case is the various credit facilities availed by the defendants from the erstwhile Syndicate Bank.

3. It is the case of the applicant that the 1stdefendant, a Partnership firm represented by 2nd and 3rd defendants as its Partners, engaged in the business of Digital Printing approached the applicant bank for grant of credit facilities for the purpose of their business vide Loan Application dated 06.03.2015 and the applicant considering the said request vide sanction dated 10.03.2015 sanctioned a Term Loan of Rs.10,00,000/-. It is stated that the defendants executed necessary loan and security documents on 11.03.2015 and the defendant 2 and 3 also executed guarantee agreements on 11.03.2015 thereby guaranteeing due repayment of the credit facility availed by the 1st defendant.

4. It is also the case of the applicant that at the request of the 1st defendant the applicant sanctioned a overdraft loan of Rs.7,00,000/- on 24.03.2015 and the defendants executed necessary loan and security documents on 24.03.2015

and the defendants 2 and 3 also executed guarantee agreements on 24.03.2015.

5. It is the further case of the applicant that the 3rd defendant deposited the title deeds of the schedule mentioned property with the applicant bank on 16.03.2015 with an intention to create equitable mortgage over the same in favour of the applicant and confirmed the same by executing Memorandum of Deposit of Title deeds dated 16.03.2015 registered as Doc. No.2389 of 2015, SRO, Katpadi.

6. It is also the case of the applicant that the defendants committed default in repayments and failed to regularize the loan accounts despite repeated request and hence the loan account was classified as NPA on 10.10.2015 in accordance with the guidelines of the Reserve Bank of India. It is stated that as the defendant did not come forward to clear the outstanding dues, however, executed acknowledgement of debts on 31.01.2018. It is stated that as the defendants did not come forward to clear the dues and hence the applicant invoked the provisions of SARFAESI Act and issued the demand notice under Section 13(2) of the Act on 20.11.2015, followed by possession notice under Section 13(4) of the Act on 28.01.2016.

6. It is the case of the applicant that after availing the loan, the defendants were irregular in remitting the loan amount. The efforts of the applicant bank to make the defendants to settle the loan did not yield any result, and hence the applicant approached this Tribunal seeking issuance of a Recovery Certificate allowing recovery of the amount due in the account.

7. Summons were taken out to the defendants and the same were served and the defendants were represented by Ld. Counsel. The chance for filing reply statement by defendants was closed on 06.02.2020. Applicant Bank filed Proof Affidavit along with 24 documents, which were marked as Ex. A-1 to A-24. As there was no representation on behalf of defendants on 12.06.2023 and no reply statement was also filed, the defendants were called absent and set ex-parte on that day. The Ld. Counsel for Applicant Bank made his submissions on 09.06.2023 and thereafter the matter stood till this date for passing final orders.

8. The following issues arise for consideration in the matter: - (a) Whether the applicant had succeeded in proving the liability of the defendants?

(b) What order as to cost of the proceedings need be passed?

These issues are considered together.

9. Heard the Ld. Counsel for the applicant, perused the OA averments and the record placed before the Tribunal.

10. The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-24 along with the proof affidavit. The documents produced in evidence are all found admissible. The proof affidavit of the applicant bank remained unchallenged and rebutted. Therefore, on careful consideration of proof affidavit along with exhibits filed on behalf of the applicant bank, besides the material placed before the Tribunal, the Tribunal is satisfied that the applicant bank has successfully proved the OA claim against the defendant. Further, the statement of accounts in respect of the loan account produced and certified under the Banker’s Book Evidence Act, clearly indicates that the amount claimed by the applicant is due from the defendant. It is clear from the statement of accounts that penal interest is not capitalized.

11. In view of the foregoing, it is clearly evident that the application filed by the applicant bank is well within the period of limitation and this Tribunal possesses the territorial and pecuniary jurisdiction to entertain this OA.

12. In view of the fact that the loan facility availed by the defendants is a business loan and the applicant has claimed interest at contractual rate till the date of filing of the OA, this Tribunal is of the view that the pendente lite interest can be awarded at reduced rates.

13. During the pendency of the OA, the applicant bank filed a Part Satisfaction Memo in SR No.1282 of 2022 dated 26.04.2022 stating therein that the applicant bank had brought the mortgaged property to sale under SARFAESI Act and has realized a sum of Rs.19,10,000/-. This Tribunal by its proceedings dated 16.06.2022 recorded part satisfaction of the OA claim.

14. In view of the afore mentioned discussions, the only conclusion this Tribunal can draw is that the applicant had clearly proved the disbursement of the loan, which the applicant is entitled to realize. Hence, OA is disposed off in the following manner: - (a) TA No.389 of 2023 stands allowed.

(b) Applicant is permitted to realize a sum of Rs.25,99,226/- together with interest at the rate of 12% per annum (simple) from the defendants jointly and severally, from the date of filing of the OA till date of realization after deducting all the amounts received by them during the pendency of OA, and also by selling the other assets of the defendant.

(c) It is made clear that the applicant bank shall give credit the sum of Rs.19,10,000/- realized by sale of the secured asset on its respective date. If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant Bank, the defendants 2 and 3 are 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.

14. 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