State Bank of India vs M/s Vaigai Nonwoven (P) Ltd. on 29 December 2023

FINAL ORDER

1. This Transferred Application is originally filed before DRTI and originally numbered as OA 90/2018. The Application is filed seeking recovery of an amount of Rs.6,77,01,506.32p, being the due amount in various credit facilities availed by the borrowers, with further interest from the defendants jointly and severally and also by sale by the schedule mortgaged properties.

2. The defendant is not disputing the availment of the credit facility. In respect of the OA claim but it is the case of the defendant that the claim is exorbitant and the application of rate of interest is totally baseless. It is also contended that various rehabilitation proposals submitted were not considered. Another contention taken is that the request for reschedulement was not considered by the Applicant.

3. The defendants had also filed a counter claim which got numbered as Counter Claim No. 1 of 2018. The counter claim is made contending that due to the gross and willful negligence on the part of the Bank in not submitting online application for the subsidy under TUFS (Technology Upgradation Fund Scheme) which was in force from 01.04.2007 to 31.03.2012, the applicant was deprived of the subsidy. It also stated that by the said scheme, the 1st defendant to the OA was eligible for a 10% capital subsidy and 5% interest incentive. It is also stated that the 1st defendant got them registered as a technical textile unit as required under the scheme. It is also stated that the Applicant bank was the lending agency and ought to have forwarded the Application to the office of SBI Commercial branch and then to the Office of the Textile Commissioner to claim the said subsidy and incentive.

4. According to the counter claimant, the Bank had forwarded the Application to TUFS Cell Mumbai on 15/09/2012 then certain additional information was fought and the Bank had responded on 20/12/2012. It is also the case in the counter claim that a letter dated 15/01/2016 was issued by the Commissioner of Textiles pointing out that the Bank failed in submitting online application with in stipulated time of one year from the date of sanction and hence the same was not considered for the benefit.

5. The Applicant had filed their rejoinder (reply) to the counter claim inter alia contending as followes. The 1st defendant was not eligible for TUFS subsidy as the same was to be -approved by Ministry of Textiles. It is also stated that the scheme for the period from 2007-12 was vogue and there was a cut of date. It is also stated that the 1st defendant had not approached the Applicant for availing credit facilities under TUF scheme. It is further stated that no claim for subsidy was submitted by the first defendant, at the time of procuring the loan and therefore, it was not possible for the bank to forward the claim for subsidy and could only take up the case with the Ministry based on a subsequent request by the 1st defendant. Apart from above, it is also the defence of the Applicant to the counter claim that the borrower does not have registration number as on date of sanction of the loan. It is also stated that the textile ministry allotted the number only on 01.08.2012 and hence the Counter Claimant is not entitled to get benefit of 20.07.2012 Scheme.

6. Hence according to the Applicant the belated procurement of registration number by the counter claimant is the reason for belated submission of the subsidy application. It is also pointed out that the Applicant had once again submitted application of subsidy to the best of their efforts. The Applicant further submits that no application to fix US dollar rate was filed by the claimant to the counter claim and similarly no application for any flood reliefs were submitted.

7. During the pendency of the OA 6th defendant expired and his Legal Representatives were impleaded as Defendants 7 to 13. Defendants 7, 8, 10, 11 and 13 were set exparte on 23.10.2018.

8. From the side of the Applicant, AW1 was examined and Exhibits A1 to A17 were marked. The 2nd defendant was examined from the side of defendant as CCW-I / claimant in counter claim and Exhibits D1 to D11 were marked on 02/05/2019. Exhibits D1 to D8 were also marked on 20.02.2020 in respect of the Counter Claim and OA respectively.

9. Heard the respective counsels for both sides in OA and counter claim.

TA No.193/2023

10. In respect of the OA, the following issues arise for consideration: -

(i) Whether the Applicant had succeeded in proving the OA Claim?

(ii) What orders are to be passed?

Both these issues are gone into and decided together.

11. The Applicant case as to the availment of credit facility and defaults caused in the account is not seriously disputed by the defendants. The only dispute the defendant is having is that the Applicant is claiming exorbitant amount and had charged higher rate of interest. Apart from the above, the defendant 1 and 2 had also raised counter claimant which is dealt with separately.

12. The Applicant had let in evidence through AW1 and got marked Ext A2 letter of arrangement, agreement of loan cum hypothecation and Guarantee agreements, evidences the availment of the facilities by the defendants after due execution of loan documents. The said document evidences the liabilities of defendants. It is also to be taken into consideration that the defendants are not disputing the availment of facility and execution of necessary documents in lieu of the credit facility.

13. The creation of security by mortgage is sought to be proved by Ext A5 to A10 documents, and MODTS Ext A11 and A12, which are Memorandum evidencing deposit of title deeds. These documents are not disputed and are admissible in evidence. The documents produced and marked as Ext A5 to

A12 are sufficient to prove the case of Applicant as to the creation of mortgage in lieu of security for the credit facilities.

14. The contention of the defendant that the bank is levying exorbitant interest and the bank is presenting exorbitant claim cannot be accepted as the bank had produced evidence as to due amount. The statement of accounts duly certified under the Bankers Book Evidence Act evidences the exact due amount. The defendant had raised the objection as to admissibility of the last page of statement contending that the same is not a system generated one. This contention through ex facie feels attractive does not prevent this Tribunal from accepting the statement. Even though the certification cannot apply to the last page which is a manual preparation as to applied interest, this Tribunal is inclined to accept the same as the same is in conformity with the statement of accounts which are duly certified. Hence this Tribunal is of the view that the Applicant had successfully proved the OA claim and as such the OA is to be allowed.

15. In respect of the interest, it is to be noted that the transaction is purely commercial one. It is also to be noted that the OA claim is arrived at by calculating interest at the agreed rate, which is on the higher side, this Tribunal is inclined to allow the recovery at a reduced rate of 10%; however with monthly rests.

16. Hence TA 193/2023 stands allowed and the following order is passed: - (a) The Applicant is permitted to recover an amount of Rs.6,77,01,506.32p with pendent lite and future interest at 10% with monthly rests from the date of filing of the OA till realization after giving credit to all the amount

received and recovered during the pendency of OA, including the amount covered by the part satisfaction already recorded on 18.08.2022 and allowed the same to be recovered from defendants and their assets.

(b) Schedule properties other than those already sold have to be proceeded against and if the sale proceeds are not sufficient the defendants and their other assets are liable to be proceeded against. However the liability of the defendants 7 to 10 are limited to the extent of the estates inherited by them from D6.

(c) A recovery certificate is to be drawn and issued to the Recovery Officer to enable recovery as per the above terms.

(d) Applicant is allowed to realize the cost of proceedings for which cost memo is to be filed in 15 days from the date of receipt of copy of the order. Counter Claim No.1 of 2018

17. The defendants 1 and 2 are raising the counter claim putting forward a claim for Rs.1,85,54,828. As already narrated in paragraph 3, it is case of Counter Claimant that because of the failure of Applicant in not submitting online application for Technology Upgradation Fund Scheme (TUFS) which was in force from 01.04.2007 to 31.03.2012, the claimants in counter claim were deprived of the 10% capital subsidy and 5% interest incentive. According to the counter claimant, the bank had forwarded the application to TUFS cell only on 15.09.2012 and there is undue delay in furnishing additional information, which was forwarded only on 20.12.2012. Ultimately the

Commissioner of Textiles issued a letter on 15.01.2016 intimating that the claim could not be accepted as the same is not promptly submitted on time.

18. In reply to the counter claim, the Applicant had filed their rejoinder stating that the claimant was not entitled for TUFS subsidy. It is also stated that the 1st defendant did not approach Applicant for availing the credit facility under the Scheme and no claim for subsidy was submitted while or during the processing of the loan. The Applicant also contends about the lack of registration of the claimant with the Ministry, which according to the Applicant was procured by the claimant only on 01.08.2012 and contends that because of the above the claimant is not entitled for a benefit which was available up to 20.07.2012.

19. In support of the counter claim the claimant had filed their proof affidavit in conformity with the pleading in the counter claim and got marked Exts D1 to D11 for the purpose of counter claim. The Applicant Bank had also filed their counter proof affidavit producing the loan documents and the TUF scheme.

20. The following issues arise for consideration in the counter claim: -

(i) Whether the claimants were entitled for the subsidy they claim to be entitled?

(ii) Whether the Applicant bank and their action/inaction is responsible for denial of subsidy?

(iii) What orders are to be passed in the counter claim? Issue Nos. 1 and 2 are gone into and decided together.

21. Both sides have no dispute as to the existence of TUF scheme which was in existence from 1.04.2007 till 31.03.2012. It is the case of the counter claimants that they approached the Applicant bank only as they were the nodal bank for the scheme. It is also clear from the communication of the Deputy Director, Ministry of Textiles dated 15.01.2016 that the case of claimant was not considered as the application for UID was not submitted on time. It is also clear that online application for UID under R-TUFS is to be submitted within a year from date sanction of the loan and the bank had uploaded online belatedly as a left out case. In the circumstances the Counter Claimant’s contention that the claim is not considered for the late submission of application by bank is not in dispute.

22. In respect of the above it is the contention of Applicant bank that no claim for subsidy was submitted at the time of processing the loan. This contention is to be addressed in the light of the fact that the loan documents does not show any request by the claimant as to the request for subsidy. The letter of arrangement and loan agreements does not evidences any such application for subsidy by the claimant. The contention of the applicant that they had submitted the application as “best of their effort” is also to be accepted in the light of the above fact. It is also relevant to note that the Ministry had allotted the number to the Counter Claimant only on 01.08.2012.

23. In the absence of any evidence as to any application submitted by the claimant much less any communication by the claimant that they are seeking the credit facility covered by interest subsidy under TUFS, the Tribunal cannot accept the contention that the bank’s failure to upload the request on time was the sole reason for rejection of the claim and the subsidy. In the absence of any evidence on to any request by the claimant that they require the bank to forward the TUFS application on time, no negligence can be attributed to the bank in not uploading the same on time.

24. Another aspect to be taken note of is that the claimant is putting forward their counter claim alleging denial of a scheme which was admittedly in the force from 01.04.2007 to 31.03.2012. The alleged cause of action is based on a communication dated 15.01.2016 which is evidently issued in pursuant to a visit of the 2nd defendant. Obviously the scheme which was available only upto 31.03.2012. Hence claimant is alleging the inaction of the bank leading to the rejection of benefit of a scheme which was available upto 31.03.2012. The cause of action allegedly took place on 15.01.2016 is an extended one procured by positive action by the claimant in relation to a cause of action which otherwise arose atleast on 05.09.2012, when a defective claim as evidenced by the communication of SME branch dated 20.12.2012, (Ext B4) is submitted. The counter claim is made only on 31.10.2018 which is admittedly beyond 3 years from the cause of action. Hence the claim petition is to be dismissed on the ground of limitation even though no contention in this respect is taken by the Applicant bank.

25. In view of the discussions as held here in before the Tribunal is of the considered opinion that the counter claim is to be rejected and hence the same is rejected.

26. In the result TA 193 of 2023(OA 90 of 2018) stands allowed and counter claim 1 of 2018 stands dismissed, all pending IA’s stands closed, no orders as to cost.

26. Issue copies in accordance with Rule 16 of the Debt Recovery Tribunal (Procedure) Rules, 1993. (Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court, on this the 29th day of December, 2023) Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI