CENTRAL BANK OF INDIA vs THE COIMBATORE SPINNING AND WEAVING COMPANY 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.1,83,09,372.62 with subsequent interest at the rate of 16% 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, 3rd & 4th Defendants filed their Written Statements on 01.11.1978, 18.11.1978 & 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 4th Defendant, The Union of India towards Part Satisfaction of the amounts due to the Applicant Bank from the 1st Defendant and Coimbatore 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 03.08.2023 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 08.03.1972 u/s.18 AA 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 Ld. Counsel for the Applicant Bank further submitted that 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.80,00,000/-, (ii). Cash Credit Open maximum of Rs.20,00,000/- and (iii). Documentary Bill Purchase maximum of Rs.30,00,000/-. The Applicant Bank initially sanctioned Rs.80,00,000/- under Cash Credit Key Loan in June 1972. Similarly Cash Credit Open Facility amount of Rs.10,00,000/- was granted in the year 1972. A sum of Rs.20,00,000/- was also granted under documentary bills 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 221/1978 before the Subordinate Judge of Coimbatore to recover a sum of Rs.1,83,09,372.62 with subsequent interest at the contract rate.

6. Further, the Ld. Counsel for the Applicant Bank submitted that the Bank has also sanctioned various credit facilities to M/s.The Coimbatore Murugan Mills Ltd.,. M/s. The Coimbatore Murugan Mills Ltd., was taken over by the 2nd Defendant as per the Orders of the Government of India dated 19.12.1972 u/s.18(a) of Industries (Development & Regulation) Act, 1951. Subsequently with effect from 21.09.1974, Administration of M/s.The Coimbatore Murugan Mills Ltd., 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. The Coimbatore Murugan Mills Ltd., simultaneously.

7. The Ld. Counsel for the Applicant Bank submitted that 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. The Coimbatore Murugan Mills Ltd., and others simultaneously. A Joint Final Order was passed by the Commissioner of Payments on 30.11.1994. A sum of Rs.1,83,09,372.63 was claimed against the Defendants herein before the Commissioner of Payments. Initially only a sum of Rs.95,57,798.41 was allowed and the same was received. The Applicant Bank further claimed a sum of Rs.70,18,046.29 as against the Defendants before the Commissioner of Payments and the same was allowed.

8. The Ld. Counsel for the Applicant Bank further submitted further that in pursuance of the Orders passed by the Commissioners of Payments the Applicant Bank has received entire Principal Amount due from the Defendants and M/s. The Coimbatore Murugan Mills Ltd.,. 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. The Coimbatore Murugan Mills Ltd.,. 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 Ld. Counsel for the Applicant Bank further submitted that the Applicant Bank had filed 38 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 Exs.A-1 to A-38 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 Ld. Counsel for the Applicant Bank further submitted that 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 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.

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[M.P. BALASUBRAMANIAN] PRESIDING OFFICER

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

31.12.1974 to 31.12.1977 Key loan account of the 1st defendant with the plaintiff A.1

31.12.1974 to 31.12.1977 Open loan account of 31.12.1974 to 31.12.1977 A.2

14.07.1972 to 31.12.1977 Over – draft term loan account of 14.07.1972 to 31.12.1977 A.3

14.07.1972 Letter by 1st defendant to plaintiff listing the documents passed to plaintiff relating to cash credit key loan account A.4

14.07.1972 Demand promissory note by 1st defendant to plaintiff for Rs. 80,00,000/- A.5

14.07.1972 Letter of continuity by 1st defendant to plaintiff A.6

14.07.1972 Letter of 1st defendant to plaintiff authorizing operation of account. A.7

14.07.1972 Letter by 1st defendant to plaintiff authorizing to make debit & credit entries A.8

14.07.1972 Agreement of pledge by 1st defendant to plaintiff A.9

14.07.1972 Letter by 1st defendant to plaintiff listing the documents passed to the plaintiff relating to cash credit open loan account.

A.10

14.07.1972 Demand promissory note by 1st defendant to plaintiff for Rs.10,00,000/- A.11

14.07.1972 Letter of continuity by 1st defendant to plaintiff A.12

14.07.1972 Letter by 1st defendant to plaintiff authorizing operation of account A.13

14.07.1972 Letter by 1st defendant to plaintiff authorizing to make debit & credit entries A.14

14.07.1972 Agreement of hypothecation by 1st defendant to plaintiff A.15

11.08.1972 Certificate of registration of charge for Rs. 10,00,000/- granted by the registrar of companies A.16

31.12.1974 Letter of confirmation of debit balance in the key loan account of the 1st defendant as on 31st December 1974 by the 1st defendant to the plaintiff A.17

31.12.1974 Letter of confirmation of debit balance in the open loan account of the 1stdefendant as on 31.12.1974 by the 1st defendant to the plaintiff A.18

08.02.1975 Letter by 1st defendant to plaintiff confirming the debit balance in the key loan and open loan accounts as on 31st December 1974 and enclosing the separate balance confirmation (Documents 17 & 18 above) A.19

06.05.1972 Letter by the 1st defendant requesting rescheduling of the repayment of the over – draft term loan then due by the 1st defendant to the plaintiff A.20

14.07.1972 Letter of confirmation of balance in the over – draft term loan account of the 1st defendant as on 14.07.1972 by the 1st defendant to plaintiff A.21

14.07.1972 Letter by 1st defendant to plaintiff listing the documents passed to the plaintiff relating to over draft account A.22

14.07.1972 Demand promissory note for Rs. 8,50,000/- by 1st defendant to plaintiff A.23

14.07.1972 Letter of continuity by 1st defendant to plaintiff A.24

14.07.1972 Letter by 1st defendant to plaintiff authorizing operation of account A.25

14.07.1972 Letter by 1st defendant declaring that the properties equitably mortgaged to the plaintiff are free from encumbrance etc. A.26

14.07.1972 Letter by 1st defendant to plaintiff undertaking not to alienate or encumber the properties mortgaged to the plaintiff A.27

09.06.1972 Agreement of guarantee executed by 2nd defendant in favour of plaintiff A.28

28.02.1973 Deed of Rectification of agreement of guarantee executed by the 2nd defendant in favour of plaintiff A.29

21.06.1972 Agreement of guarantee by the governor on the on the state of Tamil Nadu in favour of plaintiff A.30

28.02.1973 Deed of Rectification of agreement of guarantee executed by the 3rd defendant in the favour of plaintiff A.31

26.12.1977 Registered notice issued by the plaintiff to the 1st defendant returned unserved A.32

26.12.1977 Registered notice issued by the plaintiff to the defendants 1 to 3 A.33

29.12.1977 Postal acknowledgement of the 2nd defendant for receipt of the above notice A.34

29.12.1977 Postal acknowledgement for the service of the above notice on the chief secretary, government of Tamil Nadu A.35

07.01.1978 Notice issued to the 3rddefendant and the 2nd defendant under section 80 (1) C.P.C with draft plaint enclosed there with. A.36

10.01.1978 Postal acknowledgement A.37

10.01.1978 Postal acknowledgement A.38

Sd/-

[M.P. BALASUBRAMANIAN] PRESIDING OFFICER