1. This is an Original Application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 initiated by the Indian Overseas Bank, Shayampet Branch, Warangal Dist., against the defendants no. 1 to 4, jointly and severally, praying for issuance of Recovery Certificate to a sum of Rs. 34,09,417/- with future interest @ 13.75% p.a. with monthly rests from the date of O.A. together with interest, cost and other usual reliefs.
2. The brief facts of the case as made out in the Original Application by the applicant bank is that the defendant no. 1 is a proprietary concern represented by defendant no. 2. At the request of defendant no. 1, the applicant bank has sanctioned a cash credit facility of Rs. 36.75 lakhs against the personal guarantees of defendants no. 3 and 4. The above limits are collaterally secured by way of immovable properties belonging to defendant no. 3. The defendants have executed the relevant documents on 15.07.2015.
The applicant bank further submits that after availing the loan facility, the defendant no. 1 was violating the agreed terms and conditions by not submitting monthly stock statements and financial statements. In view of non submission of stock statements, financial statements and non-payment of overdues, the applicant bank issued Recall notice dated 01.04.2016 calling upon the defendants to liquidate the debt. As the defendants failed to regularize the loan, the loan account was classified as NPA as on 31.03.2017 and the applicant bank initiated recovery proceedings by issuing demand notice dated 20.04.2017 under Sec. 13(2) of the Act. At this state, the defendants approached the applicant bank and sought time by executing Revival Letters dated 12.05.2017 by the defendant no. 1 and 18.05.2017 by defendants no. 3 & 4. The defendants failed to liquidate the debt inspite of execution of Revival Letters and the applicant bank continued the measures under SARFAESI Act, 2002 and issued Possession Notice dated 09.08.2017.
3. Notices were issued to the defendants to show cause as to why the relief prayed for by the applicant bank be not granted. After issuance of the notice, the defendants No. 3 appeared through her Counsel and had filed her Written Statement. Defendant No. 4 adopted the Written Statement submitted by defendant no. 3. Defendants no. 1 and 2 are ex-parte.
4. In the Counter Affidavit filed by the defendants no. 3 and 4, the defendants submit that at the time of sanction of the loan, the officials of the applicant bank has taken signatures on blank printed forms and also on alleged documents and printed formats which are now filled to harass the defendants. The applicant bank has charged exorbitant rate of interest and capitalized the interest which is against the directives of RBI. The applicant bank has not followed the guidelines of RBI applicable to MSME units and failed to detect the early symptoms of the sickness in the 'handholding stage'. The applicant bank is not in order in initiating the proceedings under SARFAESI Act, 2002 when the defendants are ready to pay the entire loan amount if the applicant bank can rectify the injustice done to the borrower by not extending the reliefs and concessions for rehabilitation is extended and the loan amount is restructured strictly in accordance with the guidelines of the RBI.
5. The defendants have filed their evidence-on-affidavit in support of their claim in the written statement.
6. I have heard the learned Counsel for the parties and have perused the relevant documents.
7. On the perusal of the pleadings, the only issue which arise for consideration is (i) Whether the claim of the applicant bank is within time? (ii) Whether the defendants had utilized the loan facilities granted by the bank? (iii) Whether all the defendants are liable to the amount due to the applicant bank or not?
8. The applicant bank by oral and documentary evidence has established its case. The documentary evidence comprises from Annexure/Exhibit A-1 to Annexure/Exhibit A-16 which are available in paper book filed by the applicant bank.
9. From the perusal of the records, it is seen that the applicant had sanctioned cash credit facility of Rs. 36.75 lakhs and the defendants executed the relevant documents on 14.07.2015. The Defendant No. 1 executed revival letter dated 12.05.2017 and the Defendants No. 3 and 4 have executed revival letters dated 18.05.2017 which were marked as Exhibit/Annexure-10, 11 and 12 in the O.A. By executing above revival letters on 12.05.2017 and 18.05.2017, the limitation available to the bank for filing the Original Application was upto 11.05.2020 whereas the O.A. had been filed on 30.04.2019. Since it is a mortgage suit, the limitation available to the bank for filing the Original Application was 12 years i.e. upto 14.07.2027, whereas the O.A. had been filed on 30.04.2019 well within the period of limitation. Accordingly, it is held that the Original Application is within the limitation.
10. From the perusal of the documents referred above and the certified copy of the statement of account, which is filed as Annexure/Exhibit-A-14, it is established that the Defendants had availed the financial facilities from the applicant bank and had withdrawn the amount through the account.
11. The oral testimony comprises of an affidavit of Sri A. Prashanth Kumar, working as Senior Manager of the applicant bank. The averments in the application and the facts stated by the witness of the applicant in his affidavit are unrebutted. His statement finds corroboration from the documentary evidence on records and the Statement of Account. Therefore, there is no reason to disbelieve the evidence adduced on behalf of the applicant bank. He had established that the Defendants were sanctioned cash credit facility of Rs. 36.75 lakhs and the defendants executed the relevant documents on 15.07.2015. Thus, from the oral and documentary evidence the applicant bank has established its case. The applicant bank has proved that the application is within time, the Tribunal has territorial jurisdiction and the rate of interest charged as per the terms of the agreement entered into between the applicant bank and the Defendants.
12. From the perusal of the Statement of Account, which is Annexure/Exhibit-14, the total outstanding comes to Rs. 34,09,417/- which the applicant bank is entitled to recover from the Defendants. The certified copy of the Statement of Account is admissible in evidence under Section 4 of the Bankers Books Evidence Act and on the basis of the said certified copy of the Statement of Account, an award can be made in favour of the applicant.
13. The applicant bank has also claimed pendente lite and future interest @13.75% p.a. with monthly rests on the loan. The interest of justice will meet if pendente lite and future interest is granted @13.75% p.a. with simple on the loan account.
14. In view of the above discussion and after considering the entire evidence-on-affidavit of the applicant bank and the documents filed by the applicant bank, I have no hesitation to hold that the applicant bank is entitled to recover a sum of Rs. 34,09,417/- from the Defendants No. 1 to 4. The applicant bank shall also be entitled to pendente lite and future interest on the said amount @13.75% p.a. from the date of filing of the Original Application till the date of realization.
a. The application of the applicant bank for the recovery of Rs. 34,09,417/- (Rupees Thirty four lakh nine thousand four hundred seventeen only) is allowed on contest with cost against the Defendants No. 1 to 4. The Defendants shall pay pendente lite and future interest @ 13.75% per annum on the amount due from the date of filing of the Original Application till full and final realization of the claim amount. The applicant bank can recover the bank dues from the Defendants by sale of the remaining property hypothecated and mortgaged to the applicant bank which is morefull
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y described in Schedule "A" and Schedule "B" in the Original Application. If the sale proceeds are insufficient to satisfy the Certificate, then from other properties of the Defendants which are not charged. The Defendants are restrained from depleting, transferring, encumbering or in any way dealing with their assets without first paying the claim of the applicant bank. The applicant bank is entitled to the costs of the OA, which include Advocate Fees prevailing in the State. The applicant bank is directed to file Cost Memo within two weeks from the date of receipt of this order. Issue Recovery Certificate accordingly. Communicate a copy of this order to the parties concerned. (Dictated to PA, transcribed by him, corrected, signed and pronounced by me in the open Court on this the 1st day of January, 2020)