STATE BANK OF INDIA vs M/s Sameera Trading Co on 24 February 2026

FINAL ORDER

1. The Original Application in fact originally filed before the Debts Recovery Tribunal-I, and got numbered as OA No. 877/2012 stood transferred to this Tribunal and got renumbered as TA No. 571/2017. The above Transfer Application is filed by the applicant bank seeking issuance of the recovery certificate for Rs. 64,51,62,608/- (Rupees Sixty Four Crore Fifty One Lakh Sixty Two Thousand Six Hundred Eight Only) along with further interest thereon from 01.04.2010 from the defendants being the amount claimed to be due from the 1st defendant, a partnership firm; wherein the 2nd, 3rd and 4th defendants are its partners.

2. The averments set forth in the TA is as follows- the 1st defendant a partnership firm engaged in the business of trading and export of iron ore were having long time exports contracts with M/s. Noble resources Ltd., Hongkong and M/s. Top gain minerals, Macau for supply of 2,50,000 M.T. or iron ore per annum valid for a period of three years commencing from November 2007 till October 2010. The defendants used to enter into a memorandum of understanding with their clients and as the defendants were receiving the proceeds of their business by way of foreign currency in order to Hedge/ protect the price in conversion approached the applicant bank for sanction of financial limits for derivative limits for hedging future receivables in lieu of the above transaction. The nature of contract was that the customer of the bank agrees to sell certain amount of foreign currency to the bank at specified agreed rates irrespective of the conversion rate prevailing on the date of said sale and bank will be obliged to occur to the terms and conditions of transaction by way of receiving the same for a specific amount.

3. It is also stated that is the customer fails to fill specific amounts of specific foreign currency at the specific time, the bank will still have to keep their commitments with the third unknown party with whom they have to pay the money in specified foreign currency. The consequence of the non-payment by the bank on the respective maturity rate the difference amount in ongoing market exchange rate and the agreed rate will be debited to the parties account and the parties are liable to pay the said amount to the bank. The defendants had availed the above- mentioned facility and sought for sanction of derivative limits for hedging future export receivables vide their letter dated 18.10.2007 and the applicant bank agreed to the said arrangement pursuant to which the defendants on 16.12.2007 requested for hedging export receivables stating that they understood the nature of risk involved in the transaction. Pursuant to the request the defendants were sanctioned a credit exposure limit for derivatives of Rs. 59.40 crores and forward contract limits of Rs. 540 crores in pursuant to which the defendants had executed necessary documents.

4. The virtue of the afore mentioned agreement the defendants were obliged and required to sell one or two million US Dollars to the applicant bank within the specific time at the specified rate as mentioned and agreed upon by them on 08.01.2008. The above agreement was facilitated as and when the defendants export the iron ore, minerals and metals to foreign buyers, the defendants receive sale consideration amount in US $ and defendants are required to convert the same into Indian Rupee for their business purpose and the fluctuating market exchange rate will not hamper the on-going business of the defendants. The defendants had virtually in lieu of their endeavor to protect their business from the fluctuating rates had agreed to sell the US $ to the applicant bank on each maturity or expiry dated as fixed by the respective agreements and the transaction has to be done through current account at Hospet Branch.

5. It is also the case of the applicant bank that the defendants sold One million US$ when the spot/ on going exchange rate was less than Rs. 40.27 on 29.01.2008, 27.02.2008, 31.03.2008 and 30.04.2008 as against the prevailing exchange rate at relevant point of Rs. 39.41, Rs. 39.74, Rs.

40.15-25 and Rs. 40.27 respectively on above mentioned dates. Since the bank had agreed to pay at Rs. 40.27, the difference amount between Rs. 40.27 and the respective prevailing rate preferred were credited to the account of the defendants. It is also the case of the applicant that subsequently from 28.05.2008 till 29.12.2010 the on-going market exchange rate was higher than the agreed exchange rate of Rs. 40.27. The defendants failed to perform their obligation of selling agreed 2 million US $ on the respective maturity/ expiry dates and the bank had to buy US $ from the market in order to fulfill its contractual obligations to other customers, as the bank was under legal obligation to do the same. By virtue of above transaction the differential amount was debited to the account maintained by the defendants by the bank and the defendants were put on notice about the respective credits and the debits made to the account.

6. Even though by virtue of the contract the defendant has on option to terminate the contract before the expiry of the contractual period when the defendants were under the obligation to pay the amount to the bank, the defendants did not exercise the above option of termination of the contract and they continued the contract. The defendants deliberately defaulted in delivering the US$ to the applicant bank as agreed on the respective dated and due to the failure of the obligations and terms of contract by the defendants, the applicant bank had been put to financial loss. The defendants are liable to pay a sum of Rs. 64,51,62,608/- (Rupees Sixty Four Crore Fifty One Lakh Sixty Two Thousand Six Hundred and Eight Only).

7. Even though the defendants on 22.06.2010 wrote a letter informing that they are approaching the head office of the applicant bank for a settlement and requested the bank not to charge interest and to provide extension for terms of repayment. Though the bank has promptly responded to the above letter informing as to their readiness for discussion in the matter, no headway was made from the side of the applicant. It is also the case of the applicant that the defendant firm had also availed Export Packing Credit Facility (EPC) and term loan facility from the applicant offering equitable mortgage of immovable property and though the export packing credit facility was liquidated the term loan outstanding is still liable from the part of the respondents. The applicant though had issued the demand notice to which a reply has been issued by the respondents.

8. Hence on the above premises the applicant is approaching this Tribunal by filing the above TA seeking the issuance of recovery certificate enabling the applicant to recover the amount due as claimed in the TA.

9. The defendants though entered appearance had instead of filing their written statement moved an application u/s 8 of the Arbitration and Conciliation Act with a prayer to refer the matter to the Arbitrator as IA No. 3641/2015 while the above application was pending a final order happened to be passed on 26.05.2018 by this Tribunal. The said order has been impugned before the Hon’ble High Court in WP No. 31577/2018 wherein a final order passed by this Tribunal was set aside and matter was again relegated to this Tribunal with a direction to hear the arguments and decide the S.8 application and permitting this Tribunal further to proceed the matter depending on the fate of the S.8 application.

10. The above IA was considered and by the order dated 29.08.2025 the prayer to refer the matter to the arbitrator has been declined and IA No. 3641/2015 stands dismissed vide separate order.

11. The applicant had already adduced evidence in this matter by filing a proof affidavit dated 03.07.2017. Despite the dismissal of S.8 application, the defendants did not prosecute the matter promptly nor filed written statement rebutting the contentions of the applicant as taken in the TA. Despite the matter being listing for hearing on 16.10.2025, 04.11.2025 and 21.01.2026.

12. In the above scenario this Tribunal is inclined to hear the matter on the basis of available pleadings as only the counsel for the applicant addressed this Tribunal on merits and the counsel for the defendants though present was not ready to address this Tribunal on merits.

13. The applicant’s evidence is lead by AW-1 who is then Chief Manager of the applicant bank and had deposed wide proof affidavit in terms of the pleadings of the TA and got marked in evidence the following documents as A3 to A21. Annexure Date Documents A-3 13.02.2006 Partnership deed A-4 18.10.2007 Letter of the defendants requesting for sanction or limit for hedging

A-5 16.12.2007 Letter written by the defendants to the applicant bank A-6 02.01.2008 Master agreement along with Annexure A-7 08.01.008 Letter executed by the defendants to the applicant bank A-8 to A-

-- Advice issued to defendants intimating debit/ credit A14 22.06.2010 Letter of the defendants A15 30.06.2010 Letter of the applicant bank A16 -- Monthly statement of outstanding A17 -- Accounts extract A18 27.04.2010 Legal notice issued by applicant bank A19 05.06.2010 Reply legal notice issued by applicant bank A20 5.05.2011 Legal notice issued by applicant bank A21 20.05.2011 Interim reply sent by the defendants

14. No defendants evidence was adduced nor any rebuttal of pleadings were made by filing the written statement. In view of the above the only issue that is to be gone into and decided is whether the documents produced by the applicant is sufficient to prove the case settled by the applicants in their pleadings in the TA.

15. The contention of the applicant as to the availment of the facility which is the subject matter of the TA is not under dispute there is no dispute as to documents produced in the evidence in support of the pleadings as made in the TA which remains uncontroverted by filing the written statement. The request letter by the defendant produced and marked as A-4 & A-5 along with master facility agreement marked as Annexure A-6 is produced is sufficient to prove the fact that the defendants have applied for the facility in question and got availed the same by execution of necessary documents. The document produced as A-14; a letter issued by the 1st defendant company to the Assistant General Manager Applicant bank which forms even the part of the pleadings evidences the fact that the facilities as stated in the TA had been availed by the defendants and the it also evidences the obligations of the defendants to make the repayments. The above document also shreds light to the fact that the repayments had been defaulted which is also in support of the pleadings of the applicant bank in the TA. Even otherwise the statement of accounts as produced by the applicant evidences the fact that the account is nor properly serviced in terms of the master facility agreement which is already discussed in this order.

16. The entitlement of the bank to recover the amount which they dispersed under the scheme and the obligation of the defendants to pay the same are evidences by terms of master facility agreement.

17. No contra pleadings or evidence is available to enter into a different conclusion than that the applicant had succeeded in proving the claim set forth in the TA and is entitled to get an order allowing the recovery of amount due in lieu of the above transaction.

18. The documents produced by the applicant bank is sufficient to prove the facts as stated in the TA and documents are found to be admissible in the evidence. Taking note of the facts that the applicant is claiming interest @ 17.75% and also that the TA claim is arrived at calculating interest at the above rate with all penal charges, this Tribunal is of the view that thought the transaction is purely commercial one, the pendent- elite and future charges can be awarded at reduced rate of 12 percent

(12%). This deduction is given taking note of the fact that the matter has been kept pending for long 15 years and also that lending rates have come down drastically.

19. In the result, TA.No.571/2017, stands allowed,

i) The applicant is allowed to recovery an aggregate sum of Rs. 64,51,62,608/- (Rupees Sixty Four Crore Fifty One Lakh Sixty Two Thousand Six Hundred Eight Only) with further interest @12.00 % p.a.(simple) from the date of filing TA till the realization, from the defendants jointly, severally & personally, after giving credit to all the amount recovered and received during the pendency of the TA and allowed the same to be recovered by proceeding against the defendants jointly, severally & personally and their assets.

ii) The applicant bank is allowed cost of the proceedings which applicant to file cost memo within 7 days from the date of receipt of the order.

iii) The Recovery Certificate to be drawn in terms of this order and transferred to Recovery for execution.

iv) Interim application pending, if any, stands disposed of in terms of this final order.

20. 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 the Stenographer (AJ), transcribed by her, corrected and signed and pronounced by me in the Open Court, this the 24th Day of February, 2026]. Sd/- (T. RAJESH) PRESIDING OFFICER