1. This original application has been filed by the applicant on 20.10.2017, through Sh. Ravinder Kumar Sharma, Chief Manager/Principal Officer of the applicant bank, who is well conversant with the facts of the case and authorized to file the suit by way of Power of Attorney dated 21.08.2014 in his favour, under Section 19 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 (hereinafter referred to as RDDBFI Act, 1993) against the defendants No. 1 & 2 for recovery of a sum of ` 45,38,429.81 (Rupees Forty Five Lakhs, Thirty Eight Thousand, Four Hundred Twenty Nine and Paise Eighty One only) along with interest @ 13.10% p.a. with monthly rests plus 2% penal interest from the date of filing of this OA, till the date of actual and final realization along with all the costs & charges.
2. Facts as succinctly set out in the OA are that defendant No. 1 is a Proprietorship concern of Defendant No. 2, who was already enjoying credit facilities, in the year of 2014 approached and requested the applicant bank for the sanction of a of Term Loan and Cash-Credit facility for their business of packed drinking water.
3. It is stated that the said request was considered and vide sanction letter dated 30.12.2014 a fresh Term Loan of ` 55.44 Lakhs was sanctioned @ 3.65% over Base Rate i.e. 13.85% p.a. with monthly rests against book debts up to 90 days old & hypothecation of machinery and enhancement in Working Capital Fund based limit (from existing ` 30.0 Lakhs) to R 55.00 Lakhs @ 4.15% over Base Rate i.e. 14.35% p.a. with monthly rests against hypothecation of stocks, was granted.
4. It is also stated that one of the terms of sanction was creation of equitable mortgage of the property at Plot No. 159, sector-1, Pocket-O, Bawana, New Delhi as security for the Cash-Credit Limit, which the defendants failed to comply with, hence the enhanced limits were not released. In consideration of sanction of the said facilities, the defendant No. 2 executed on 30.12.2014, on behalf of his Proprietorship firm & in his individual capacity, the security documents viz., Acceptance of letter of sanction; D.P. Note; Multipurpose document; Stamped Agreement of Hypothecation of Plant & Machinery, Stocks & Book-debts and several Stamped Undertakings/Declarations. The loan was disbursed by payments directly to suppliers, as per request of the defendants.
5. Further, it is stated that after availing the loan, the Defendant Nos. 1 & 2 failed to maintain financial and their account was declared NPA as on 31.12.2016. The applicant bank issued the legal recall notice dated 12.03.2017, calling upon the defendants No. 1 & 2 to pay the dues of the applicant bank but the same was not complied with by the defendants No. 1 & 2. Hence, the applicant bank was left with no option except to file the present original application against the defendants.
6. Notices were issued to the defendants who caused appearance through their counsel and filed their written statement.
7. In their written statement, the defendants have stated that the applicant bank has suppressed material facts and not approached this Tribunal with clean hands. It is also stated that Defendant No. 1 was enjoying Cash-Credit Limit of ` 30.0 Lakhs under the CGTMSE Scheme from Sector-8, Rohini Branch of the applicant bank. After sanction of Term Loan of ` 55.44 Lakhs and Cash-Credit facility of ` 55.0 Lakhs by the Applicant bank's Hamdard Dawakhana Branch, it was requested to transfer the existing limit to the new Branch and release the enhanced facilities, but the officials insisted upon adjustment of the limits at the old Branch, before release of Term Loan & enhanced CC limit. Accordingly, the defendants arranged funds and cleared the dues of the old branch and approached the applicant branch, along with original title-deed in respect of the property to be mortgaged (with NOC), requesting for release of limits, but the applicant bank refused to release the Cash-Credit limit under CGTMSE. The Term Loan was disbursed in the month of April 2015 and installments thereof were commenced from July 2015, without adjusting/refunding the 15% subsidy of approx. ` 12.0 Lakhs, despite reminders dated 09.03.2015 & 14.03.2016. It is further stated that the non-cooperative and adamant attitude of the applicant bank in not releasing the Working Capital facilities under the CGTMSE Scheme and CLCSS Scheme of the Government, despite the deposit of original title-deeds of the property proposed to be mortgaged, resulted in serious loss to the business of Defendant No. 1. Even thereafter vide letters dated 26.06.2016 and letter dated 12.03.2017, the applicant was explained the acts of omission & commission on their part leading to difficulty in repaying the dues and was requested to release the requested funds at the earliest. Hence, it is prayed to dismiss the present OA with costs.
8. The Applicant bank in its rejoinder has vehemently denied all the allegations made in the written statement by the defendants and reiterated the averments made in their OA. It is also stated that loan was disbursed in April 2014, whereas the Registration Certificate issued by DIC, Haryana for the factory at Village: Kamaspur, Sonepat was issued on 19.10.15. As per Circular dated 07.04.2014 of MSME, one of the conditions for claiming subsidy under CLCSS Scheme is that the registration of the firm should be prior to the date of application for term loan as well as for subsidy under CLCSS. Hence, the defendants are not entitled to the subsidy under that Scheme. Further, the defendants had not submitted an application for subsidy at the time of approaching for bank assistance in this regard as required in the Circular referred to above; therefore there is no question of refunding/adjusting the amount of subsidy as claimed by the defendants. It is further stated that the Term Loan was sanctioned under the CGTMSE Scheme but the Working Capital facility was sanctioned, on the condition of the collateral security by way of mortgage of property situated at DSIIDC Bawana, Delhi, which was again subject to the mortgage permission from DSIIDC, which the defendants failed to submit. In the circumstances, the Working Capital facility was not released.
9. The Applicant bank has filed its evidence by way of affidavits of Sh. Vinod Kumar, Senior Manager (AW-1) & Sh. Ravinder Kumar Sharma, Chief Manager (AW-2) of the applicant bank who have proved various documents viz. Copy of accepted sanction Letter (Exh. No. AW-1/2); D.P. Note (Exh. No. AW-1/3); Multipurpose Document (Exh. No. AW-1/4); Agreement of Hypothecation (Exh. No. AW-1/5); Undertakings/Declarations (Exh. No. AW-1/6 to AW-1/8); Request for disbursement of TL dated 20.04.2015 & letter by applicant addressed to supplier (Exh. No. AW-1/9 Colly); Request letter dated 02.06.2015 & Invoice (Exh. No. AW-1/10 Colly); Bill dated 12.06.2015 & copy of cancelled Pay Order (Exh. No. AW-1/11 Colly); Power of Attorney (Exh. No. AW-2/1); Reminder letter dated 02.01.2017 (Exh. No. AW-2/12); Legal Demand Notice (Exh. No. AW-2/13); Certified Statement of Account (Exh. No. AW-2/14); Statement of Uncharged and penal interest (Exh. No, AW-2/15) and Statement of total outstanding dues (Exh. No. AW-2/16).
10. The defendants have also filed their evidence by way of affidavit of Defendant No. 2 and submitted documents in support of their averments viz., Copy of existing credit facility as (Exh. No. DW-1/1); Copy of NOC by old Branch (Exh. No. DW-1/2); Copy of letter dated 09.03.2015 (Exh. No. DW-1/3); Copies of three letters dated 14.03.2016 (Exh. No. DW-1/4 Colly); Copy of letter dated 25.06.2016 (Exh. No. DW-1/5); Copy of letter dated 27.03.2017 (Exh. No. DW-1/6) and Copy of letter dated 15.07.2017 (Exh. No. DW-1/7).
11. Heard and record has been thoroughly perused. Now, I shall deal with the objections raised by the Defendants.
12. The only objection raised by the Defendants is that the Applicant bank deliberately and in a mala fide manner failed to disburse the Working Capital facility of ` 55.0 lakhs sanctioned by it. As a result, though Machinery were purchased and installed out of the funds by way of Term Loan, the business could not be run for want of raw material and other purchases, in the absence of working capital funds-hence losses were incurred.
13. A perusal of Sanction letter dated 30.12.2014 (Exh. No. AW-1/2) shows that only the Term Loan of ` 55.44 Lakhs was sanctioned under CGTMSE Scheme and the Cash Credit Limit of ` 55.0 Lakhs was sanctioned subject to the condition of "EQM of Leased Land & three storied building at Plot No. 159, Sector-1, Pocket-0 at Bawana, New Delhi owned by Sh. Bhushan Gupta P. As submitted by the Applicant's Counsel, the defendants failed to submit an NOC from DSIIDC, lessor of the said property and consequently a mortgage could not be created. This fact has not been denied by the Defendants. Thus the Applicant Bank was justified in withholding the disbursement of the Cash-Credit Facility due to lapse on the part of the Defendants to produce the necessary document to comply with the condition expressly mentioned in the sanction advice. In light of the above facts, the objection raised by the Defendants does not hold any water and is hereby rejected.
14. The witnesses of the applicant bank have fully corroborated the averments made in this OA. The evidence led by the applicant banks which consists of mainly written/typed documents has gone unchallenged and there is no question of disbelieving the same based upon the documents. Accordingly, the applicant bank is entitled to recover the entire amount from both the defendants, jointly and severally, along with pendente lite and future interest, as agreed between the parties.
15. The Applicant bank has claimed pendente lite and future interest @ 13.10% p.a. with monthly rests plus 2% penal interest from the date of filing of this OA, till the date of actual and final realization, which is allowed.
16. In the light of the above discussions, the OA deserves to be allowed against defendant Nos. 1 & 2. Their liability is joint and several.
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/>ORDER (i) Resultantly, I allow this OA and direct the defendants Nos. 1 & 2, to pay a sum of ` 45,38,429.81 (Rupees Forty Five Lakhs, Thirty Eight Thousand, Four Hundred Twenty Nine and Paise Eighty One only) along with interest @ 13.10% p.a. with monthly rests plus 2% penal interest from the date of filing of this OA, till the date of actual and final realization along with all the costs & charges, failing which the amount shall be recovered by the sale of hypothecated assets including the Plant & Machinery, stocks & Book-debts etc. as well as other personal movable and immovable assets of Defendant Nos. 1 & 2. (ii) The recovery certificate be issued forthwith and be sent to the Recovery Office-I, Debts Recovery Tribunal-III, Delhi. (iii) Let fresh statement of accounts be filed by the applicant bank before Ld. Recovery Officer. (iv) Parties are directed to appear before the Recovery Officer-I, DRT-III, Delhi on 18.03.2020. (v) Copies of final order as well as Recovery Certificate be sent to all concerned free of cost. File be consigned to records.