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Industrial Investment Bank of India Limited and Another v/s World Digital Sound Limited and Others

    Miscellaneous Petition No. 29 of 1999

    Decided On, 07 June 2005

    At, High Court of Judicature at Bombay

    By, THE HONOURABLE MR. JUSTICE S.U. KAMDAR

    For The Appearing Parties: Tawade & Sofiya Pinto, Advocates.



Judgment Text

1. The petitioners before the Court is a financial institution known as Industrial Investment Bank of India Ltd and the petition is filed in pursuance of the power conferred u.s.13(1) of the Industrial Reconstruction Bank of India Act, 1984.


2. Respondent No.1 is a company within the meaning of the Companies Act, 1956 and is interalia incorporated and registered under the Companies Act. Respondent No.1 company is engaged in manufacture of Compact Discs (CDs). In course of carrying on the aforesaid business the said company Respondent No.1 approached the petitioners and requested for grant of term loan of Rs.300.0 Lacs for financial assistance for manufacturing unit at Noida Export Processing Zone. The said company was established with the installed capacity of 5 million CD's manufactured per year.


3. Respondent No.1 has in consideration of advancement of loan of Rs.300 Lacs has agreed to repay the said amount in installments along with interest and charges under clause 3.1 of the term loan agreement. Company has also created the first mortgage and charge in favour of the petitioner in respect of the company's immovable properties both present and future. A hypothecation agreement is also entered into in respect of all movables; machinery, spares, tools and accessories. The said movables are also charged to the petitioner.


4. However, after disbursement of the amount respondent company did not make repayment of the dues on its due dates. Respondent No.3 is a Canara Bank and is also one of the pari pasu charge holder in respect of the loan lent and advanced by them to the respondent No.1. The said deed of hypothecation in favour of the petitioner was executed on 26.7.94.


5. It is the case of the petitioner that charge both under the deed of mortgage as well as deed of hypothecation has been duly registered in favour of the petitioner herein. There were disputes between the petitioners and respondents in so far as execution of mortgage deed is concerned and it was the petitioners' case that inspite of mortgage to create a charge in respect of the units being Plot N.57A, Noida Export Processing Zone, Noida U.P. and also immovable property situated at A-6/17, Vasant Vihar, New Delhi 110 057 and office No.3 & 4, Citizen Apartments, Opp. Gaiety-Galaxy, Bandra (West) Mumbai 50, respondent No.1 did not execute a necessary mortgage deed in respect of aforesaid properties.


6. Under the terms and conditions of the said loan agreement the entire loan amount was required to be repaid in 30 quarterly installments W.E.F.15.5.96. However, respondent did not make payment as per installment and committed various defaults to repay the amount. The respondents failed and neglected to make payment of principal amount as well as interest to the defendants. According to the petitioners as on 14.5.99 there was an outstanding principal amount of Rs.270.0 Lacs with interest amount of Rs.3,36,38,332/- and liquidated damages in the form of penal rate of interest of Rs.17,42,044/- aggregating to Rs.6,23,80,376/-. In view of the fact that the aforesaid amount was not paid the petitioners issued notices to the respondent company and called upon respondent company to make aforesaid payment of the entire loan amount. However, the respondent company has failed and neglected to make aforesaid payment. In view thereof, present petition is filed.


7. Petition is served. An Affidavit of Service dt. 6.4.05 is taken on record. Originally the packets had come back and thus, the substitute service was permitted which has also been done but inspite of the same respondents have neither filed Vakalatnama nor filed any affidavit in reply and none is appearing for respondent company. The learned counsel for the Canara Bank states that they are pari passu charge holder and they will claim the amount from the petitioners as and when said properties are sold and sale proceeds are received. Petitioners have filed additional affidavit of claim in view of the Judgment of the Apex Court in the case of Central Bank of India Vs. Ravindra and Others reported in 2002 (1) SCC Pg 367 and has given the figures that as on today the total amount outstanding comes to around Rs.20,85,12,777/- which is due and

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payable by the respondent No.1 to the petitioners herein. 8. In view of the aforesaid position I am satisfied that the claim of the petitioners is due and payable. Respondent has availed of the loan but has committed defaults in repayment. In view of the aforesaid position, I pass the following order: 9. Petitioners are directed to make payment of Rs.20,85,12,777/- with interest @ 12% from the date of Judgment till payment and/or realization.
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