KARNATAKA GRAMIN BANK vs SRI..RAMANNA on 10 November 2023

FINAL ORDER

The present Application was originally filed before the Debts Recovery Tribunal-I, Bengaluru on 18.02.2012 under Section 19 of the Recovery of Debts due to Banks and Financial Institutions Act 1993 and numbered as OA 193/2013, to recover a sum of Rs.33,75,318/- (Rupees thirty three lakh seventy five thousand three hundred and eighteen only) with further interest thereon and costs from the Defendants jointly and severally.

2. Subsequently, in view of the Government of India Gazatte Notification dated 30.01.2017, the Application was transferred to this Tribunal and re-numbered as TA No.1616/2017.

Brief facts of the case:

3. The case of the Applicant Bank is that the Defendants had approached the Applicant bank for sanction of Credit facility/Pledge Loan of Rs.29 lakh against the security of 3900 Paddy Bags. Applicant bank sanctioned the Pledge Loan/Warehouse Loan of Rs.29,00,000/- (Rupees thirty lakh only) repayable in 12 months from the date of first disbursement along with interest @ 12% p.a. compounded monthly with penal interest of 2% for default period compounded half yearly. The interest was subject to change as per the Reserve Bank of India notifications.

4. Defendants executed necessary loan and security documents on 24.12.2009 which include, Application for Pledge Loan/Ware House Loan, Produce Loan Agreement, Pronote for Rs.29,00,000/- & Take Delivery Letter, Godown/Building on Lease Agreement, Specimen Signature Card and Certificate of Loan papers obtained, Letter of Access and Proforma of the Letter to be obtained from the borrower. As security for repayment of the credit facility, Defendants pledged 3900 Paddy Bags.

5. After availing the credit facility, Defendants failed to repay the loan dues despite various reminders/notices and committed default. The Applicant bank issued Legal Notice dated 12.09.2011 to Defendants recalling the outstanding amount due in the loan account. As there was no positive response from the Defendants, the applicant bank has filed the present Application to recover the amount due from the Defendants.

6. After the filing of this Application, summons sent to Defendants. Defendant No.1 entered appearance by filing vakalat through Counsel (Vani Gowda K.B.) and filed Statement of Objections on 12.08.2014. The Defendant No.2 has not appeared before this Tribunal and place the Defendant No.1 as exparte vide proceeding dated 24.06.213. Thereafter, the case was posted from time to time for further proceedings and later, the case was posted for arguments on 14.06.2022 and 26.09.2022 but there was no representation for Defendants. On 01.06.2023, the case was posted for Orders - when the matter was heard.

7. Written Statement filed by Defendant No.1, in brief:

(a) The Defendant No.1 has appeared through has Counsel and filed written statement contending defendants availed the financial facility from applicant bank on 24.12.2009 against the pledge of 3900 old Paddy Bags of old Sona Masuri. The loan was repayable in 12 months. The Applicant Bank has sold the pledged paddy by the defendant No.1 in the absence of the Defendants and without issuing any notice to the Defendants. The Defendant No.1 further states that the market value of the paddy and selling price may varies. The Applicant Bank has not mentioned anywhere in the appeal at what price, when at which place the Applicant Bank sold the pledged paddy etc.,

(b) The Defendant No.1 further, states in his written statement that he has filed and RTI application through his local counsel seeking proper books of accounts, but the Applicant Bank has failed to give any information, replying to the application that the Applicant bank does not fall under the purview of the RTI.

(c) The Defendant No.1 further submits that he has filed a memo of calculation and the Applicant Bank is liable to refunded the excess amount of Rs.15,03,582/- and he is not liable to pay any amount to the Applicant Bank towards the outstanding credit facility/ pledge loan. Defendants prayed that the Application (TA) may be dismissed with exemplary costs.

Heard and perused the records.

8. To prove the case of the Applicant Bank, its Manager Sri. D. Shankar Gouda S/o D Basana Gouda, filed Evidence Affidavit, the same was considered as AW-1 and marked as Ex.A1, the list of documents came to be marked as Ex.A2 and the documents came to be marked as Ex.A3 to Ex.A12.

9. Defendant No.1 filed Evidence Affidavit, the same was considered as DW-1 and marked as Ex.D1. The DW-1 reiterated the contentions raised in the Written Statement. 9.1 Though the Defendants filed a petition/memo for cross examination of AW-1 and a detailed counter filed by applicant bank and the case was posted to various dates from time to time, there was no follow-up on the side of Defendants. Later, the case was posted for arguments. Proceedings dated 21.03.2022, 26.09.2022, 04.01.2023, 27.02.2023 and 01.06.2023 reveals that there is no representation for Defendants and the Tribunal heard the arguments of applicant bank on 01.06.2023 and the case was finally posted for orders.

10. The availing of loan facility, execution of loan documents and the pledge of paddy bags are not in dispute. The Applicant Bank has filed the written arguments, IA for identified properties and objection stating in para 8 of the objection that all other averments and ground contained in the application, filed by the Defendants which are not specifically admitted or otherwise traversed are denied putting the Defendants to strict proof thereof.

11. In this context, the Tribunal places reliance on judgment of the Hon’ble High Court of Andhra Pradesh in the case titled Corporation Bank V/s Sushil Enterprises (2004) 1 ISJ Banking 160, wherein it is held that: “Nobody is expected to sign the documents without reading or when it is blank and if he does so he does at his own risk and the very fact that the plaintiff bank has disbursed the loan amount and Defendant had availed it also shows that the documents were valid and duly executed”

12. It is alleged by Defendants that the Application is barred by time. The Application was filed before the Tribunal on 24.09.2009. The Defendants executed various loan and security documents on 18.06.2009. Further, the Applicant bank has filed a copy of Godown/Building on Lease Agreement dated 11.06.2010 along with the Application. Therefore, a perusal of the Application and the documents filed by the Applicant Bank clearly reveals that the application is not barred by time and the allegation fails.

13. It is the case of the Defendants that applicant bank has illegally sold the pledged paddy bags for a throw away price and the details have not been furnished by bank. Document No.6 filed with the OA

i.e., Godown/Building on lease agreement has been executed by Defendants in favour of the Applicant Bank with the details of godown where the pledged goods are stored. It is surprising to note the allegation of Defendants that they are not aware of the sale of goods and the bank has illegally sold the pledge paddy bags.

14. Regarding the details of disposal of paddy stock, the applicant bank has filed a detailed Memo on 02.01.2023 showing the particulars of Paddy stock disposed of, date of sale, bidders, amount etc. Therefore, the Applicant bank is directed to give credit to the sale proceeds realized out of the pledged paddy bags to the loan account of Defendants after deducting the expenses incurred, is not appropriated to loan account as on the date of the Order.

15. It is alleged by Defendants that there is no basis for the claim made by the Applicant bank. To establish their claim, applicant bank has filed the proof/documentary evidence through the Evidence Affidavit of AW-1 and by marking of documents-Exhibits A3 to A13. Ex.A13 is the certified statement of account pertaining to the loan account of Defendants containing the details of loan transactions and showing a balance outstanding due of Rs.33,75,318. The Defendants have not pointed out any discrepancy in the Statement of Account filed by the applicant bank. Further, the Defendants have not produced any proof or documentary evidence to dispute the claim made by applicant bank.

15.1 There is no contra-evidence available on record to repudiate the claim of the applicant bank regarding the availing of loan by Defendants, execution of loan and security documents and the default committed in repaying the loan dues. Therefore, in the absence of any material proof or evidence to repudiate the claim of the applicant bank, the claim made by the applicant bank stands proved.

16. On going through the proceedings of the case, submissions of both sides and the documents produced by applicant bank, this Tribunal comes to the conclusion that the applicant bank is entitled to get a final order on the following lines:-

ORDER

17. The TA is allowed with costs,

a) The applicant bank is allowed to recover a sum of Rs.33,75,318/- (Rupees thirty three lakh seventy five thousand three hundred eighteen only) along with future interest @ 14.25% +2% (2% penal form due date) p.a. compounded half yearly from the date of filing the Application (17.02.2012) till the date of realization from the Defendant Nos.1 & 2 jointly and severally;

b) Applicant bank is directed to give credit to the amount realized out of the sale of pledged paddy bags to the loan account of Defendants after deducting the expenses incurred; c) In the event of failure of the Defendants to pay the aforesaid amount, the bank is at liberty to proceed against the personal assets of the Defendants (both movable and immovable) to recover the balance dues, as required under law; d) The applicant bank shall file the latest memo of calculation of OA amount together with interest, cost etc., to be paid by the Defendants, duly considering the amounts, if any, paid by the Defendants and/or amount realized by sale of assets etc., (including the sale proceeds of the pledged paddy bags) during the intervening period after the filing of the TA, enabling the Registry to prepare

Recovery Certificate for the amount to be paid by Defendants to the applicant bank; e) The applicant bank shall file memo of costs within ten days from the date of this final order; f) Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order and g) Interim Application pending, if any, stands disposed of with the final order. h) The Registry is directed to issue Recovery Certificate in terms of final order as sought in the OA under Section 19 (22) of RDDB Act.

18. A copy of this order be communicated to the parties concerned. [Dictated to the Stenographer (CS), after its transcription, corrected and signed by me on this the 10th day of November, 2023].

Sd/- PRESIDING OFFICER DRT-II, BENGALURU

ANNEXURES

WITNESSES EXAMINED FOR THE APPLICANT BANK:

AW-1: Sri D. Shankar Gouda S/o D. Basana Gouda, Senior Manager of Applicant bank.

Exhibits on the part of the Applicant:

Exhibit

Documents A1 Applicant’s Evidence A2 List of documents A3 Application for Pledge Loan/Ware House Loan dated 13.11.2009 submitted by the Defendants A4 Sanction Memorandum dated 13.11.2009 A5 Produce Loan Agreement dated 13.11.2009 A6 Pronote dated 18.06.2009 for Rs.32,00,000/- & Take Delivery Letter to DPN dated 13.11.2009 A7 Godown/Building on Lease Agreement dated 13.11.2009 executed by Defendants A8 Specimen Signature Card dated 13.11.2009 A9 Letter of Access dated 13.11.2009 executed by the godown owner. A10 Proforma of the Letter to be obtained from the borrower dated 13.11.2009 submitted by Defendants A11 Recall Letter dated 16.06.2011 sent by the Applicant bank A12 Statement showing total outstanding in the loan account of the defendants. (already filed with the paper books)

Witness Examined for the Defendants: DW-1: Mr. Ramanna S/o Devalappa, Defendant No.1

Mr. Sharanappa S/o Rudrappa, Defendant No.2

Exhibit

Documents D1 Defendant’s Evidence

Sd/- PRESIDING OFFICER DRT-II, BENGALURU