PUNJAB NATIONAL BANK vs Mr. Muhammed Raffique on 30 August 2022

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 an aggregate sum of Rs.6,53,63,804.45p comprising of a sum of Rs.5,09,16,645.45p together with further interest at the rate of 8.50% per annum with monthly rests being the amount due under Cash Credit Account and a sum of Rs.1,45,47,159/- together with further interest at the rate of 8.50% per annum with monthly rests being the amount due under Packing Credit Account plus 2% penal interest 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 defendant from the applicant bank.

3. It is the case of the applicant that the defendant approached the applicant for grant of various credit facilities for improving his business of manufacture and supply of leather products and the applicant considering the said request sanctioned Cash Credit Limit of Rs.250 lakhs and Packing Credit of Rs.150 lakhs to the defendant vide its sanction letter dated 7.8.2015. It is also the case of the applicant that the defendant to secure the said limits executed various loan documents on 27.8.2015 viz., Common Agreement, Agreement of Hypothecation of Assets, Sole Proprietorship letter. It is the further case of the applicant that the defendant executed letter dated 28.8.2015 confirming deposit of title deeds of the schedule property with the applicant on 27.8.2015 and creation of equitable mortgage over the same in favour of applicant bank and also executed Memorandum of Deposit of Title deeds dated 28.8.2015 registered as Doc. No.5648 of 2015 on the file of SRO, Vaniyambadi and vide Doc. No.2455/2015 dated 8.9.2015 on the file of SRO, Periamet in favour of the applicant bank.

4. It is also the case of the applicant that after availing the credit facilities, the defendant was highly irregular and committed default resulting in the classification of the account as NPA on 28.02.2017 and also invoked the provisions of the SARFAESI Act and issued the demand notice under Section 13(2) of the SARFAESI Act on 06.06.2017. It is stated that the efforts of the applicant to get the account regularized by the defendant was in vain and the defendant did not come forward to clear the outstanding dues

5. It is the case of the applicant that after availing the loan, the defendant was irregular in remitting the loan amount. The efforts of the applicant bank to make the defendant 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.

6. Summons were taken out to the sole defendant and the same was served at both the addresses. The defendant was initially represented by a Ld. Counsel. However, as the defendant did not come forward to file their written statement despite availing sufficient time, the defendant was set ex-parte on 15.4.2019. The defendant filed an application in IA Dy No.1088/2021 seeking to set aside the order setting ex-parte the defendant on 15.4.2019, however the same was returned by the Registry for certain compliance and the same was not re-presented. Applicant Bank filed Proof Affidavit along with 9 documents, which were marked as Ex. A-1 to A-9 on 21.06.2022. The Ld. Counsel for Applicant Bank made his submissions on 03.08.2022 and thereafter the matter stood till this date for passing final orders.

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

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

These issues are considered together.

8. Heard the Ld. Counsel for the applicant, perused the OA averments and the records placed before the Tribunal.

9. The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-9 along with the proof affidavit. Exhibit A-1 is the Sanction letter dated 7.8.2015 issued by the applicant bank. Exhibit A-2 is the Agreement of hypothecation of assets dated 27.8.2015 executed by the defendant in favour of the applicant. Exhibit A-3 is the common Agreement dated 27.8.2015 executed by the defendant in favour of the applicant. Exhibit A-4 is the Sole Proprietorship letter dated 27.8.2015 executed by the defendant in favour of the applicant. Exhibit A-5 is the Letter dated 28.8.2015 evidencing deposit of title deeds executed by the defendant in favour of the applicant. Exhibit A-6 is the Memorandum of Deposit of Title deeds dated 28.8.2015 executed by the defendant in favour of applicant registered as Doc. No.5648/2015, SRO, Vaniyambadi. Exhibit A-7 is the Sale deed dated 27.5.2015 executed by Saroja Ammal and others in favour of Mr. Mohamed Raffiq registered as Doc. No.3522 of 2015, SRO, Vaniyambadi. Exhibit A-8 and A-9 are the statement of accounts in respect of both the loan accounts along with certificates under Bankers’ Book Evidence Act.

10. Exhibit A-1 evidences that the defendant approached the applicant for grant of various credit facilities for the development of his business of manufacture and supply of leather products and considering the said request the applicant vide its sanction letter dated 7.8.2015 sanctioned Cash Credit Limit of Rs.250 lakhs and Packing Credit Limit of Rs.150 lakhs to the defendant. Exhibit A-2 to A-4 evidences that the defendant to secure the said limits executed various loan and security documents in favour of the applicant on 27.8.2015. Exhibit A-5 to A-7 evidences that the defendant is the owner of the schedule property pursuant to the sale deed dated 27.5.2015 executed in his favour and he had deposited the title deeds of the property with the applicant bank 28.8.2015 with an intention to create equitable mortgage over the same in favour of applicant and also executed Memorandum of Deposit of Title deeds dated 28.8.2015 in favour of applicant bank registered as Doc. No.5648/2015, SRO, Vaniyambadi. Exhibit A-8 and A-9, the statement of accounts in respect of 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 defendants. It is clear from the statement of accounts that penal interest is not capitalized.

11. The proof affidavit of the applicant bank remained unchallenged and unrebutted. 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. Point is answered accordingly.

12. In view of the fact that the loan availed by the defendant being business loan, this Tribunal is not inclined to interfere with the interest rate claimed by the applicant, however proceeds to reject the prayer for award of penal interest.

13. During the pendency of the OA, the applicant bank filed a memo in SR No.2342/2022 dated 30.3.2022 stating therein that the OA schedule property has been sold by the applicant under SARFAESI Act and a sum of Rs.1,01,80,000/- has been realized and the same has been appropriated to the loan account on 21.2.2020.

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) OA No.210 of 2018 stands allowed.

(b) Applicant is permitted to realize an amount of Rs.6,53,63,804.45p with further interest @8.5% per annum with monthly rests 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. It is also made clear that the applicant shall given credit to the sale proceeds of Rs.1,01,80,000/- realized by selling the OA schedule property be given due credit to the loan account on its respective date.

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

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 30th day of August, 2022) Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI