Indian Overseas Bank vs M/s Vidhan Shoes Pvt. Ltd. on 29 December 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 for recovery of an aggregate sum of Rs.6,69,41,400.02p comprising a sum of Rs.2,24,50,109.31p together with interest at the rate of 11.95% per annum with monthly rests being the amount due under Cash Credit Account; a sum of Rs.1,31,62,587.86p together with interest at the rate of 12.20% per annum with monthly rests being the amount due under Term Loan Account and a sum of Rs.2,12,28,072.85p together with interest at the rate of 16% per annum with monthly rests along with 2% penal interest from the date of filing of the application till the date of realization in full along with costs of this application and for selling schedule mentioned properties.

2. The above Original Application is filed before DRT-I Chennai and stood transferred to this Tribunal and renumbered as above.

3. The case of the applicant can be encapsulated as follows: - (a) The 1st defendant, a Private Limited Company engaged in the business of Shoes and Leather products approached the applicant bank for grant of credit facilities for the purpose of its business and the applicant considering the said request sanctioned Cash Credit Limit of Rs.25 lakhs, Secured Packing Credit of

Rs.1.20 crores and Term Loan of Rs.1.75 lakhs vide its sanction dated 26.3.2014. Based on the Board Resolution of the 1st defendant dated 27.3.2014, the defendants 2 & 3 executed necessary loan documents on 27.3.2014. The defendants 2 to 5 executed guarantee agreements on 27.3.2014 thereby guaranteeing due repayment of the credit facility availed by the 1st defendant. The 1st defendant deposited the title deeds of Schedule ‘B’ property with the applicant with an intention to create equitable mortgage over the same on 28.11.2014 and confirmed the same by letter dated 29.11.2014 and by executing Memorandum of Deposit of Title deeds dated 28.11.2014 registered as Doc. No.1791/2015 on the file of SRO, Arcot.

(b) At the request of the 1st defendant the applicant enhanced the Cash Credit facility to Rs.1.75 crores and the Secured Packing Credit to a sum of Rs.2.75 crores vide sanction dated 11.01.2016. The 1st defendant represented by defendants 2 and 3 as its Directors executed necessary loan documents on 11.1.2016. The 1st defendant executed Supplemental Memorandum of Deposit of Title deeds dated 29.02.2016 extending the mortgage of Schedule ‘B’ property to secure the enhanced facilities, registered as Doc. No.1529/2016, SRO, Arcot.

4. It is further stated that even though the defendants had obliged to repay the amount promptly and regularly, they failed to do so resulting in default in repayment and hence the loan account was classified as NPA on 31.08.2018.

5. It is contended by the applicant that the applicant’s officials had on many occasions approached the defendants requesting them to regularize the account and despite the same, no effort was made by the defendants to get the account regularized or to pay back the amount. The applicant issued a demand notice on 19.9.2018 under Section 13(2) of the SARFAESI Act.

6. It is also the case of the applicant that despite repeated reminders and requests the defendant failed to make the repayment forcing the applicant to file this OA seeking recovery of the amount due in the account with further interest and costs.

7. The defendants remained absent and hence were called absent and set ex-parte on 20.05.2019.

8. The applicant had let in evidence through AW-1, who had sworn to a Proof Affidavit in terms of the pleading in the OA and also produced Exhibits A-1 to A-39 and got the same marked in evidence. Exhibits A-34 to A-36 were marked subject to proof and relevancy.

9. Heard the Ld. Counsel for the Applicant and considered the contentions as taken in the OA in the light of documentary evidence and proof affidavit.

10. The following issues arise for consideration in this matter: -

(i) Whether the applicant had succeeded in proving the OA claim as against the defendants?

(ii) What orders are to be passed?

Both these issues are gone into and decided together.

11. The case put forth by the applicant in the Application remains unrebutted as defendants remained ex-parte. The evidence tendered by the applicant remains uncontroverted and undisputed. The evidences put forth by the applicant were found admissible. From the statement of accounts as produced by the applicant, it is evident that the amount as claimed in the OA is outstanding in the account, which the applicant is entitled to get recovered from the defendants and their assets. The claim of the applicant is well within the period of limitation and there is no capitalization of penal interest.

12. In view of the fact that the subject loan is a business loan availed by the defendants and the applicant has claimed interest at contractual rates till the time of filing of the application and the interest rates have also considerably come down, this Tribunal is inclined to reject the prayer of the applicant for award of interest with monthly rests and award the pendent lite and future interest at simple and reduced rates.

13. 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 and the defaults committed by the defendants, which the applicant is entitled to realize. Hence, TA is disposed off in the following manner: - (a) TA No.585 of 2023 stands allowed.

(b) Applicant is permitted to realize an aggregate sum of Rs.6,69,41,400.02p together with interest at the rate of 11% simple per annum from the defendants jointly and severally from the date of filing of the application till the date of realization in full along with costs of this application and for sale of the schedule properties and other assets of the defendants.

(c) If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant Bank, the defendants 2 to 5 are personally liable for all such amounts due under the Loan Accounts.

(d) Applicant is permitted to realize cost of the proceedings and shall file cost memo within 15 days from the date of receipt 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 29th day of December, 2023) Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI