CENTRAL BANK OF INDIA vs THE COIMBATORE MURUGAN MILLS LIMITED on 27 February 2024

O R D E R

1. This Original Application is filed by the Applicant Bank, under Section 19 (1) of the RDDB & FI Act, 1993,

a. to direct the Defendants 1 to 3 personally, jointly & severally and the 4th Defendant in Accordance with their liability under the Sick Textiles Undertakings (Nationalization) Act 1974 (Central Act No.57 of 1974) to pay to the Applicant Bank a sum of Rs.46,94,838.88 with subsequent interest at the rate of 15% per annum from the date of Application, till the date of its realization and with Costs.

2. After the filing of the Original Suit, the 2nd & 4th Defendants filed their Written Statements on 21.12.1978 & 28.06.1985 respectively, there is no need to elaborate crux of the Plaint and Written Statements, since the 4th Defendant viz., Union of India i.e., the Commissioner of Payments Ministry of Textiles, New Delhi paid a sum of Rs.80,91,687.65 and was received by the Applicant Bank.

3. During the pendency of the Original Application, on 09.02.2004, the Ld. Counsel for the Applicant Bank filed a Memo stating that:

“...they have received a sum of Rs.80,91,687.65 from the 5th Defendant, The Union of India towards Part Satisfaction of the amounts due to the Applicant Bank from the 1st Defendant and Coimbatore 3 TA 179/2002

Spinning and Weaving Mills, the 1st Defendant in TA No.1128/2002. The amount received is only the Principal Amount due to the Applicant Bank and the Defendants are yet to pay the interest.

The amount due to the Applicant Bank

from 1st Defendant in TA No.1128/2002 Rs.70,18,046.29

The amount due to the Applicant Bank

from 1st Defendant

Rs.15,86,839.11

Total Principal due

Rs.86,04,885.40

Amount Deducted by the NTC

Rs.05,13,197.75

The amount received

Rs.80,91,687.65..”

4. The Ld. Counsel for the Applicant Bank had filed Written Argument on 01.05.2023 stating that they have been availing credit facilities from the Applicant Bank had secured credit facilities, the Administration of the 1st Defendant was taken over by the 2nd Defendant as per the Orders of the Government of India issued on 19.12.1970 u/s.18-A of the Industrial Development and Regulation Act 1951, under the Sick Textiles Undertaking (Nationalization) Ordinance dated 21.09.1974, the Administration of the 1st Defendant was taken over by the National Textile Corporation Limited.

5. the 2nd Defendant representing the 1st Defendant had requested for the Credit Facilities from the Applicant Bank such as (i). Cash Credit Key Loan maximum of Rs.30,00,000/-, (ii). Cash Credit Open Loan maximum of Rs.50,00,000/- and (iii). Documentary Bill Purchase maximum of Rs.10,00,000/-. The Applicant Bank initially sanctioned Rs.10,00,000/- under Cash Credit Key Loan in October 1971 and in May 1972 it was enhanced to Rs.28,00,000/-. Similarly Cash Credit Open Facility amount of Rs.15,00,000/- was granted in the year 1972. A sum of Rs.10,00,000/- was also granted under documentary bills 4 TA 179/2002

purchase. Having the availed the Credit Facilities, the 1st Defendant represented by the 2nd Defendant executed independent loan documents or all the three loans all in favour of the Applicant Bank. Defendants 1 to 3 committed default and therefore the Applicant Bank filed an Original Suit in OS No.490/1978 before the Subordinate Judge of Coimbatore to recover a sum of Rs.46,94,838.98 with subsequent interest at the contract rate.

6. the Bank has also sanctioned various credit facilities to M/s.Coimbatore Spinning and Weaving Mills. M/s.Coimbatore Spinning and Weaving Mills was taken over by the 2nd Defendant as per the Orders of the Government of India dated 08.03.1972 u/s.18(a) Industries (Development & Regulation) Act, 1951. Subsequently with effect from 21.09.1974, Administration of Coimbatore Spinning and Weaving Mills was taken over by National Textile Corporation under Sick Textiles Undertaking (Nationalization) Ordinance. The Applicant Bank had filed Original Suit to recover the amount from M/s. Coimbatore Spinning and Weaving Mills simultaneously.

7. the Applicant Bank lodged a Claim with the Commissioner of Payments Ministry of Textiles, New Delhi for the amounts due to the Applicant Bank. Similar claims were lodged against M/s.Coimbatore Spinning and Weaving Mills and others simultaneously. A Joint Final Order was passed by the Commissioner of Payments on 30.11.1994. A sum of Rs.88,28,373.40 was claimed against the Defendants herein before the Commissioner of Payments. Initially only a sum of Rs.25,13,491.98 was allowed and the same was received. The Applicant Bank further claimed a sum of Rs.15,86,831.11 as against the Defendants before the Commissioner of Payments and the same was allowed.

5 TA 179/2002

8. in pursuance of the Orders passed by the Commissioner of Payments, the Applicant Bank has received entire Principal Amount due from the Defendants and M/s. Coimbatore Spinning and Weaving Mills. A sum of Rs.80,91,687.65 was received consolidate from the Union of India towards the amount due to the Applicant Bank as against the Defendants and M/s. Coimbatore Spinning and Weaving Mills. As such the Applicant Bank is in receipt of Principal amount in the case. The Applicant Bank is entitled for interest at the contract rate from 01.04.1974 from the Defendants.

9. the Applicant Bank had filed 31 Documents in corroboration of their claim. The Applicant Bank had filed a Proof Affidavit in support of their claim on 22.03.2000 and marked as Exts.A-1 to A-31 as documents on their side in support of its claim. None of the Defendants have filed any documents to corroborate their version and none of the Defendants have ever disputed the claim made by the Applicant Bank.

10. the Applicant Bank is entitled only interest due on the principal amount from 01.04.1974. Therefore, the Ld. Counsel for the Applicant Bank prays for passing of an order taking the facts into consideration by this Hon’ble Tribunal and to allow the OA.

11. There is no argument advanced by the Ld. Counsel for the Applicant Bank in the case and therefore, the Written Arguments filed by the Applicant Bank is taken into consideration by this Tribunal.

12. This Tribunal having taken in to consideration of the pleadings and the Written Arguments filed by the Applicant Bank and now the Applicant Bank is only seeking a prayer to allow the interest portion of the claim alone as the principal sum is already recovered by the bank 6 TA 179/2002

under a settlement by the Union of India, through the Commissioner of Payments, Ministry of Textiles, way back in the year of 1994.

13. Therefore, this Tribunal is the view that, the dues itself having settled by the Commissioner against the claim by the bank, it appears that the settlement having made by the Commissioner for claims, the entire claims ought to have taken in to consideration and therefore, the further claim of interest, if any, also can be made with the Commissioner of Payments, Ministry of Textiles, Government of India in the case.

14. The loan account of the borrower company having settled by the Commissioner of Payments, Ministry of Textiles, Government of India, the claim of the Applicant Bank in seeking the interest portion alone became redundant by now. Hence, the OA stands disposed of and closed.

15. The long pendency of the OA and the facts and circumstances of the case, it is the considered view of this Tribunal that, the OA is only required to be disposed of by closing of the OA. Accordingly, the OA stands disposed of as settled and closed. No further interest is awarded in the case.

16. The Registry is directed to communicate the copy of this Order to both parties as provided in Rule 16 of the Debts Recovery Tribunal (Procedure) Rules, 1993 as amended in 2016. Dictated to Steno, directly typed on the Computer corrected and pronounced by me in the open Tribunal, this the 27th day of February, 2024.

Sd/-

[M.P. BALASUBRAMANIAN]

7 TA 179/2002

PROOF AFFIDAVIT FILED BY THE APPLICANT BANK

1. Mr.V.S.V.Sai, Chief Manager LIST OF DOCUMENTS MARKED BY THE APPLICANT BANK

Sl. No. Date Description of Document Exhibits

30-06-1975 to 31-03-03-1978 Key Loan account of the 1st defendants with the plaintiff A.1

30-06-1975 to31-03-03-

Open Loan account of the 1st defendants with the plaintiff A.2

12-06-1972 Letter by 1st defendants to plaintiff enclosed documents A.3

12-06-1972 Letter by 1st defendants to plaintiff listing the documents relating to key Loan Account A.4

12-06-1972 Dement Promissory Note for Rs.28 lakhs by 1st defendant in favour of plaintiff A.5

12-06-1972 Letter of continuity by 1st defendant to plaintiff A.6

12-06-1972 Letter by 1st defendants to Plaintiff authorising operation of account A.7

12-06-1972 Letter by 1st defendants to Plaintiff authorising plaintiff to make debit and credit entries A.8

12-06-1972 Agreement of pledge by 1st defendant in favour of Plaintiff A.9

12-06-1972 Letter by 1st defendants to Plaintiff confirming the debit balance outstanding in the 1st defendants Key Loan Account with the plaintiff as on 10.06.1972 A.10

31-12-1974 Written confirmation of balance outstanding in the 1st defendants Key Loan account with the plaintiff as on 31- 12-1974 signed by the 1st defendant A.11

30-06-1975 Written confirmation of balance outstanding in the Key Loan account of the 1st defendants with the plaintiff as on 30.06.1975 signed by the 1st defendant A.12

8 TA 179/2002

(with statement of stock in the godowns)

12-06-1972 Letter by 1st defendant to Plaintiff listing documents relating to the open Loan account A.13

12-06-1972 Demand Promissory Note for Rs.15 lakhs by 1st defendant in favour of plaintiff A.14

12-06-1972 Letter of continuity by 1st defendant to plaintiff A.15

12-06-1972 Letter by 1st defendant to Plaintiff authorising operation of account A.16

12-06-1972 Letter by 1st defendant to plaintiff authorising plaintiff to make debit and credit entries A.17

12-06-1972 Agreement of hypothecation by 1st defendant in favour of plaintiff A.18

27-06-1972 Certificate of Registration of charge of Rs.15 lakhs issued by the Registrar of Companies. A.19

31-12-1974 Written confirmation of balance outstanding in the 1st defendants Open Loan account with the Plaintiff as on 31.12.1974 signed by the 1st defendant A.20

1-7- 1975/28.7.1975 written confirmation of balance outstanding in the 1st defendants Open Loan account with the Plaintiff as on 30.06.1975 signed by the 1st defendant A.21

12-8-1975 Letter by 1st defendant to plaintiff enclosing the written confirmation of balance dated 1.7.75/28.7.75 A.22

2-11-1971 Agreement of guarantee executed by the 2nd defendant in favour of the plaintiff A.23

15-11-1971 Agreement of guarantee executed by the 3rd defendant in favour of the plaintiff A.24

25-12-1977 Notice issued by plaintiff to defendant 1 to 3 A.25

25-12-1977 Notice issued by 1st defendant returned unserved A.26

28-12-1977 Postal acknowledgement of 2nd defendant of notice dated 26-12-1977 A.27

9 TA 179/2002

28-12-1977 Postal acknowledgement of Chief Secretary, Government of Tamil Nadu for 3rd defendant of notice dated 26.12.1977 A.28

11-1-1978 Notice issued to 3rd defendant (and the 2nd defendant ) under sec.80(1) C.P.C with draft plaint enclosed therewith A.29

12-1-1978 Postal acknowledgement of Collector of Coimbatore for 3rd defendant of notice under Sec.80(1) C.P.C. A.30

12-1-1978 Postal acknowledgement of 2nd defendant of notice under Sec. 80(1) C.P.C A.31

Sd/-

[M.P. BALASUBRAMANIAN]