INDIAN OVERSEAS BANK vs M/s. Rajam Filaments, Represented by its Proprietrix Mrs. N.Lakshmi Rajam on 30 November 2021

FINAL ORDER

1. This application is filed by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 (formerly Recovery of Debts Due to Banks and

Financial Institutions Act, 1993) against the defendants for recovery of a sum of Rs.91,12,285.42p with interest @10.90% per annum with monthly rests plus overdue interest @2% from the date of filing of the OA till the date of realization in full along with costs of this application and for sale of schedule mentioned property.

2. The subject matter of the case is the Term Loan availed by the defendants from the applicant bank for purchase of machineries. The facts of the case as stated in the OA, in brief, are as follows.

3. It is the case of the applicant that the defendants approached the applicant bank for sanctioning of a Term Loan for purchase of machineries and the applicant considering the said request sanctioned a Term Loan of Rs.90,00,000/- vide its sanction dated 30.06.2017.

4. It is also the case of the applicant that having availed the said facility the defendants executed various loan and security documents on 30.06.2017 viz., Demand Promissory Note for a sum of Rs.90 lakhs, letter seeking permission to pay the loan in 78 equated monthly installments of Rs.1,61,550/- commencing from 1.1.2018, Term Loan agreement along with consent cum authorization letter and letter of hypothecation for a sum of Rs.90 lakhs along with consent cum authorization letter.

5. It is the further case of the applicant that after availing the credit facility the defendants defaulted in repayments and failed to regularize the loan despite repeated demands and requests and hence the loan account was classified as

NPA on 30.06.2016. It is also the case of the applicant that the applicant also issued a legal notice dated 15.07.2019 calling upon the defendants to regularize the loan but the defendants did not come forward clear the outstanding dues.

6. It is also 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. Summon to the 1st defendant was served and the summons to the 2nd defendant returned with endorsement “Refused” and held sufficient service. As there was no representation on behalf of the defendants on 16.07.2021, they were set ex-parte on that day. Applicant Bank filed Proof Affidavit along with 9 documents, which were marked as Ex. A-1 to A-9 on 18.11.2021. The Ld. Counsel for Applicant Bank made his submissions on 23.11.2021 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-9 along with the proof affidavit. Exhibit A-1 is the loan application dated 26.05.2016 submitted by the defendants. Exhibit A-2 is the Credit Sanction Advice of the applicant bank dated 30.06.2017 sanctioning Term Loan of Rs.90 lakhs. Exhibit A-3 is the Demand Promissory Note dated 30.06.2017 for a sum of Rs.90 lakhs executed by the defendants. Exhibit A-4 is the letter dated 30.06.2017 seeking permission of the applicant to repay the loan amount in installments. Exhibit A-5 is the Term Loan Agreement dated 30.06.2017 executed by the defendants. Exhibit A-6 is the letter of hypothecation dated 30.06.2017 executed by the defendants. Exhibit A-7 is the legal notice dated 15.07.2017 issued by the applicant along with the acknowledgement card. Exhibit a-8 is the statement of accounts in respect of the loan account. Exhibit A- 9 is the power of attorney executed in favour of the applicant for prosecuting the application.

11. Exhibit A-1 evidences that the defendants had approached the applicant for sanction of Term Loan for purchase of machineries by their application dated 26.5.2016. Exhibit A-2 evidences that the applicant bank had sanctioned a Term Loan of Rs.90 lakhs to the defendants vide its sanction dated 30.06.2017. Exhibit A-3 to A-6 evidences that the defendants to secure the loan advances executed loan and security documents on 30.06.2017 in favour of the applicant bank. Exhibit A-7 evidences that the defendants after having availed the loan defaulted in repayments and hence the loan account was classified as NPA and the applicant had sent a legal notice on 15.07.2017 calling upon the defendants to regularize the loan account. Exhibit A-8 the statement of accounts produced and certified under the Banker’s Book Evidence Act, clearly indicates that the amount claimed by the applicant is due from the defendants under both the loan accounts. It is also clear from the statement of accounts that penal interest is not capitalized. Exhibit A-9 evidences that the Manager of the applicant is authorized to initiate and prosecute the application for recovery of its dues.

12. 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 defendants. Point is answered accordingly.

13. In view of the fact that the subject loan is a Term loan for business purposes the Tribunal is not inclined to interfere with the rate of interest claimed by the applicant.

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.999 of 2019 stands allowed.

(b) Applicant is permitted to realize an amount of Rs.91,12,285.42p with interest @10.90% p.a., with monthly rests from defendants jointly and severally from the date of filing of the OA till the date of its realisation, after deducting all the amounts received by them during the pendency of OA, and also by selling the schedule property 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 2nd defendant is 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 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.

16. 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 Virtual Court, through Video Conference on this the 30th day of November, 2021)

Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI