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Stressed Assets Stabilization Fund V/S Druid Pharma Ltd. and Others.

    T.A. No. 233 of 2013 (Arising Out of OA/12/2007 - DRT-1, Kolkata)

    Decided On, 17 February 2017

    At, Debts Recovery Tribunal Kolkata

    By, THE HONORABLE JUSTICE: R.B. TRIVEDI
    By, PRESIDING OFFICER

    For Petitioner: Radhey Shyam Tiwari, Ld. Counsel And For Respondents: Biswapati Das, Ld. Counsel



Judgment Text


1. Applicant, Stressed Assets Stabilization Fund (SASF) had originally filed the present O.A. being O.A. No. 12 of 2007 on 09.02.2007 before Ld. DRT-1, Kolkata against five Defendants under Section 19 of the Recovery of Debts Due to the Banks and Financial Institutions Act, 1993 for recovery of Rs. 56,64,07,548.00 (Rupees fifty six crores sixty four lacs seven thousand five hundred forty eight) together with further interest thereon, till realization and for recovery of dues to sell the hypothecated movable assets, mortgaged immovable properties & personal assets & properties of the Defendants and costs of the O.A. etc. Subsequently, the said O.A. was transferred to this Tribunal vide Order dated 07.02.2013 of Hon'ble DRAT, Kolkata and on transfer to this Tribunal the same has been renumbered as TA/233/2013 vide order No. 01 dated 18.02.2013.

2. The Applicant, Stressed Assets Stabilization Fund has been constituted by Govt, of India in the form of a Trust for acquiring by Transfer the Stressed Assets of IDBI with a view to recovering the amounts, copy of the Trust Deed dated 24.09.2004 is annexed as Annexure 'A'. IDBI unconditionally and irrevocably sold, assigned, transferred and released all its rights, title, interest etc. in the loan granted by IDBI to Defendant No. 1 in favour of the Applicant by and under a 'Deed of Assignment' dated 30.09.2004 entered into by and between IDBI and the Applicant, copy of the Deed of Agreement is annexed as annexure 'B'.

3. The brief facts of the case as set out by the Applicant - F.I. in its Original Application are that Defendant No. 1 is a Private Ltd. Co., namely Druid Pharma Ltd. (now in liquidation) availed the financial facilities under the Project Finance Scheme from IDBI (original lender), for setting up a unit for manufacturing of Ibuprofen Pharmaceutical Specialities, Internal Nuritimal Therapy Products and immunodiagnostic kits etc. Defendant No. 1 is the borrower; Defendant Nos. 2, to 4 are the guarantors and Defendant No. 5 is another creditor of Defendant No. 1 - Company. Defendant No. 2 is the mortgagor also. At the request of Defendant No. 2, being the authorized Director of Defendant No. 1, original lender, IDBI (hereinafter referred to as Assignor) granted advance by way of rupee term loan (i) to the limit of Rs. 458.00 lacs (Rupees four crores fifty eight lacs) and (ii) Foreign Currency Loan not exceeding US $ 96,411.00 (equivalent about Rs. 32.00 lacs) to them for their business vide Letter of intent dated 29.09.1994, copy of the same is annexed as Annexure 'D'. At the request of Defendant No. 1, IDBI agreed to make revision in the project cost and reduction of term loan sanctioned in favour of Defendant No. 1 (now in liquidation) from Rs. 458.00 lacs to Rs. 350.00 lacs, vide sanction letter dated 06.12.1994, copy of the said letter is annexed as Annexure 'E'.

4. In connection with the above-mentioned Term loan of Rs. 350.00 lacs, Defendant No. 1 executed a Loan Agreement dated 08.02.1995 (01st Loan Agreement) with the IDBI, copy of the same is annexed as Annexure 'F'. Defendant No. 1 hypothecated its movable properties including plant & machinery etc. by a 'Deed of Hypothecation' dated 08.02.1995 in favour of IDBI by way of first charge as security for the First Loan, copy of the same is annexed as Annexure 'G'. By a 'Deed of Guarantee' dated 14.02.1995 executed by, the Defendant Nos. 2 to 4 unconditionally & irrevocably guaranteed with the IDBI (hereinafter referred to as 'Assignor') of the moneys referred to in the First Loan Agreement; the Defendant Nos. 2 to 4 also agreed that the said guarantee would be a continuing one, copy of the same is annexed as Annexure 'H'. In order to secure the said First Loan, Defendant No. 2 created equitable mortgage upon his immovable properties (described in Schedule 'A' & 'B', Part-A & Part-B at page 26 to 28 in the O.A.) by depositing title documents with the Applicant - IDBI, copy of Memorandum of Entry regarding creation of equitable mortgage dated 04.06.1996 is annexed as Annexure 'I'.

5. At the request of Defendants, the Assignor - IDBI granted Rupee term loan to the limit of Rs. 378.00 lacs (Second Loan) under the Project Finance Scheme, vide Letter of Intent dated 18.02.1997, copy of said Letter of Intent is annexed as Annexure 'J'. The Defendant No. 1 at its Board meeting held on 24.02.1997 passed resolution accepting the terms & conditions of the said Second Loan, copy of the same is annexed as Annexure 'K'.

6. In connection with the aforesaid Second loan of Rs. 378.00 lacs, Defendant No. 1 executed a Loan Agreement dated 11.03.1997 (Second Loan Agreement) with the Assignor - IDBI, copy of the same is annexed as Annexure 'L'. Defendant No. 1 hypothecated its movable properties including plant & machinery etc. by a 'Deed of Hypothecation' dated 11.03.1997 in favour of Assignor - IDBI by way of first charge as security for the Second Loan, copy of the same is annexed as Annexure 'M'. By a 'Deed of Guarantee' dated 11.03.1997 executed by Defendant Nos. 2 & 4, the said Defendant Nos. 2 & 4 unconditionally & irrevocably guaranteed with the Assignor - IDBI of the moneys referred to in the Second Loan Agreement; the Defendant Nos. 2 & 4 also agreed that the said guarantee would be a continuing one, copy of the same is annexed as Annexure 'N'. In order to secure the said First Loan and Second Loan, Defendant No. 2 created equitable mortgage upon his immovable properties (described in Schedule 'A' & 'B', Part-A & Part-B at page 26 to 28 in the O.A.) by depositing title documents with the Assignor - IDBI, copy of Memorandum of Entry regarding creation of equitable mortgage dated 19.03.1997 is annexed as Annexure 'O'. On 22.10.1997, the Defendant Nos. 2 & 4 alongwith Smt. Krishna Munshi, wife of Late Debabrato Munshi, Smt. Ruprani Munshi, wife of Sri S. Munshi and Smt. Ajanta Munshi, wife of Dr. Santanu Munshi (Defendant No. 4) further secured the aforesaid credit facilities in the form of Second Loan, by executing an Agreement for pledge of shares in favour of assignor - IDBI, copy of the Agreement for Pledge of Shares dated October 1997 is annexed as Annexure 'P'. The mortgage and hypothecation created by Defendant No. 1 in favour of Assignor - IDBI was duly registered with Registrar of Companies.

7. After availing the First Term Loan and Second Term Loan duly granted by the Assignor - IDBI to the Defendant No. 1, they (Defendants) committed defaults in repayment of Loans. Defendants failed and neglected to comply with the agreed terms and conditions, they did not pay the overdue interest also. Account became out of order and sticky. The Defendant No. 1 - Company made a reference to BIFR u/s. 15 of the Sick Industrial Companies (Special Provisions) Act, 1985. BIFR by its meeting dated 12.01.2000 declared that Defendant No. 1 - Druid Pharma Ltd. is sick within the meaning of Section 3(i)(o) of the said Act. Despite directions, Defendant No. 1 failed to submit any tied-up proposal acceptable to the secured creditors. Accordingly, the Hon'ble BIFR vide its order dated 06.06.2003 recommended winding up the Company (Defendant No. 1), copy of BIFR order is annexed as Annexure 'Q'. Pursuant to the direction of Hon'ble Calcutta High Court, Official Liquidator took possession of the assets of Defendant No. 1 - company and sold the same, and a sum of Rs. 2.00 crores are lying with the Official Liquidator, a letter of Official Liquidator dated 04.07.2006 is annexed as Annexure 'R'. The Defendant No. 1 in its Audited Balance Sheet for the year 2001-2002 has admitted and duly acknowledged its liabilities of the Assignor - IDBI of Rs. 10,92,32,698.00 as on 31.03.2002 and has further admitted that the debt is secured by first mortgage of immovable properties, copy of Audited Balance Sheet & Annual Report of Defendant No. 1 are collectively annexed as Annexure 'S'. Defendant No. 1 also agreed vide its letter dated 23.05.2002 to repay the Assignor - IDBI a sum of Rs. 400.00 lacs by way of O.T.S., copy of the same is annexed as Annexure 'T'. Thereafter, the Assignor - IDBI issued a Recall Notice dated 21.08.2003 upon the Defendant No. 1 demanding payment of entire loans for a sum of Rs. 27,97,16,835.00 together with further interest, till realization, but Defendant No. 1 did not comply the Notice, copy of the said recall Notice is annexed as Annexure 'U'. The Assignor - IDBI, by a Notice dated 12.02.2004 to Defendant Nos. 2 to 4 invoked the personal guarantee given by them and called upon the Defendant No. 2 to 4 to pay the sum of Rs. 27,97,16,835.00 together with further interest with effect from 02.07.2003, but the Defendant Nos. 2 to 4 failed and neglected to comply with the same, copies of said letter dated 12.02.2004 is annexed as Annexure 'V.

8. Applicant - F.I. has stated that the present dues against Defendants are Rs. 56,64,07,548.00 (Rupees fifty six crores sixty four lacs seven thousand five hundred forty eight) as on 01.01.2007 (calculated upto December 31, 2006), Certified copy of Statement of account alongwith Certificate under Bankers' Books Evidence Act has been filed, to show and prove the dues, as Annexure 'W'. The O.A. for recovery of dues as on 31.12.2006 has been filed and future interest at contractual rate from 01.01.2007 has been prayed. Applicant Bank submitted that the Applicant Bank's claim in the O.A. is within limitation.

9. The Notices were sent to Defendant Nos. 1 to 5 by the Tribunal (DRT-1); the service of Notices/summons upon the Defendants could not complete by normal process, except the Defendant Nos. 2 & 3. Defendant Nos. 2 & 3 appeared through Counsel on 23.09.2010. At the request of Ld. Counsel, the service upon Defendant Nos. 1, 4 & 5 has been completed by substituted services i.e. newspaper publication as per order dated 22.06.2011; subsequently, the said O.A. was transferred to this Tribunal vide Order dated 07.02.2013 of Hon'ble DRAT, Kolkata, as mentioned above. Defendant No. 5 appeared through Counsel on 08.04.2013, and Defendant No. 1 appeared through Counsel on 05.09.2013; and fresh Notice was served upon the Defendant No. 4 by the Tribunal. Ld. Counsel, appeared on behalf of Defendant Nos. 2, 3 & 4, on 05.05.2015; hence, service of Notices/summons upon all the Defendants has been completed. The W.S. on behalf of Defendant No. 4 has earlier been filed alongwith W.S. of Defendant Nos. 2 & 3 have been accepted. Defendant Nos. 2, 3 & 4 filed additional W.S. on 05.05.2015 and also on 09.07.2015. Ld. Counsel for Official Liquidator has filed his Report mentioning the sale proceeds of immovable assets of the Defendant No. 1 - Company (in liquidation) and deposited the entire purchase consideration of Rs. 2.00 crore to the Office of Official Liquidator, and also mentioned that vide order of the Hon'ble High Court Calcutta dated 18.03.2009 SASF has been disbursed Rs. 1.20 crore on ad-hoc basis upon furnishing an undertaking that the Applicant will refund the excess amount, if paid. Ld. Counsel for Applicant - F.I. submitted arguments on 09.07.2015, and Ld. Counsel appearing for Defendant Nos. 2 to 4 submitted brief arguments and also filed written notes of arguments on 09.07.2015.

10. On behalf of the Applicant - F.I., one Sri Zulu Jamir, son of Mera Jamir, Deputy General Manager of Applicant - F.I.'s Mumbai Office has filed the evidence-on-affidavit dated 04.02.2015 and thereby he confirmed the Applicant - F.I.'s version as stated in the Original Application. The Applicant - F.I. has also filed the original documents on 08.07.2015 as per Index Exhibit 'A' to ' W.

11. In the written statement, Defendant Nos. 2, 3 & 4 stated that they are the erstwhile directors of Defendant No. 1 Company (in liquidation) who signed and executed various loan documents; after satisfaction based on the project report, as well as business activities of Defendant No. 1 in September 1994 IDBI now Applicant - SASF sanctioned Rupee Term Loan of Rs. 350.00 lacs; in February 1997 a sum of Rs. 300.00 lacs was financed by additional unsecured loan/equity and additional Rupee Term Loan of Rs. 378.00 lacs from IDBI now Applicant - SASF; however, due to sickness & poor performance of the company from July 1997 Defendant No. 1 has defaulted to IDBI and other secured creditor State Bank of Bikaner & Jaipur (Defendant No. 5), and made a reference to BIFR in September 1999 and the BIFR declared the company sick and appointed IDBI as Operative Agency; As per BIFR directive the company (in liquidation) submitted its rehabilitation proposal with the BIFR and as per proposal total cost of estimation was Rs. 455.00 lacs and it was proposed to be made from promoter contribution of Rs. 200.00 lacs internal accrual of Rs. 144.00 lacs and fresh term loan from IDBI of Rs. 110.00 lacs, besides that need-based working capital from SBBJ was also sought for and reschedulement of repayment of funded interest for the period of 10 years including 2 years moratorium; inspite of scope of viability of the company, the IDBI & SBBJ did not agree for any rehabilitation, thereafter, the Hon'ble BIFR directed the company to submit for OTS settlement, and the company vide their letter dated 13.11.2001 submitted OTS proposal for Rs. 400.00 lacs against the outstanding of Rs. 720.00 lacs, but the proposal was not accepted by IDBI; considering the situation IDBI assessed the valuation of the assets of the company at Rs. 465.051 lacs and requested the company to improve the OTS offer, but they (company) were unable to improve the offer; the IDBI being the operative agency also took effort for change the management of the company as per BIFR's directive, and accordingly the advertisement was issued to that effect; thereafter, the Hon'ble BIFR recommended by an order dated 25.03.2003 for winding up of Defendant No. 1 - Company and finally by an order dated 11.06.2003 in connection with BIFR Case No. 274 of 1999 confirmed for winding up of Defendant No. 1 - Company and referred the matter to the Hon'ble High Court at Calcutta for necessary action as per law; as a result, the secured creditor - SBBJ filed a recovery suit against the company (in liquidation) for recovery of Rs. 3,28,93,222.00 before the Ld. DRT-2, Kolkata and the same is pending for adjudication; during pendency of the T.A./O.A. the Hon'ble High Court at Calcutta by an order dated 29.07.2005 was pleased to direct for publication of sale Notice on 18.08.2005, and the recommended Valuer appointed by the official liquidator has assessed the value of entire assets of the company (in liquidation) to Rs. 16.00 crore, and the assets of the company have been sold by the order of the Hon'ble High Court at Calcutta to M/s. Pharmacross Pvt. Ltd. for a sum of Rs. 2.00 crore and the entire sale proceeds still lying with the official liquidator; the answering Defendants stated that the directors, who have signed personal guarantee, are not necessary party in this T.A. and their names be expunged from the array of the Defendants; the assets of Defendant No. 1 (in liquidation) has been sold through Company Court for a sum of Rs. 2.00 crore and there are no other assets of the company to recover the dues of IDBI and as such the Defendant Nos. 2, 3 & 4 have no liability for payment of outstanding dues. With reference to the statement made in para 1 to 4, the answering Defendants denied & disputed each & every paras except what are matters of record. With reference to the statement made in para 1 to 4, the answering Defendants denied & disputed each & every paras except what are matters of record. In para-wise replies all the contents in para 5(1) to 5(25) and para 6 and 7 have been denied & disputed by the answering Defendants except those are matters of record and what has been specifically admitted by the Defendants. The answering Defendants submitted that the Applicant - F.I. should not get any relief/relieves as prayed for as the O.A. is not maintainable and is liable to be dismissed.

I am unable to agree with the objections taken and allegation made by the Defendant Nos. 2, 3 & 4 in their W.S. Applicant - F.I. has filed sufficient proof and documents to prove its claim, all the allegations made by Defendant Nos. 2, 3 & 4 in their written statements are baseless and are not tenable. Ld. Counsel for Official Liquidator has filed his Report mentioning the sale proceeds of immovable assets of the Defendant No. 1 - Company. The other issues raised in the W.S. cannot be accepted. These Defendants have executed guarantee letters; hence, they are liable to repay the Applicant - F.I.'s dues.

12. I have carefully gone through the pleadings, evidence, affidavits and copies of documents filed by the Applicant - F.I. and Defendant Nos. 2 to 4. Applicant - IDBI (hereinafter referred to as 'Assignor') has been able to prove that the Rupee Term Loan & Foreign Currency Loan totaling to Rs. 490.00 lacs were granted to the Defendant No. 1 vide Letter of Intent dated 29.09.1994, and thereafter Assignor - IDBI reduction the sanctioned limit from 490.00 lacs to 350.00 lacs vide letter dated 06.12.1994; necessary security documents were executed on 08.02.1995; Defendant No. 2 created equitable mortgage upon his immovable property with the Assignor - IDBI by way of Memorandum of Entry dated 04.06.1996. Assignor - IDBI further granted Second Loan to the limit of Rs. 378.00 lacs vide Letter of Intent dated 18.02.1997, and necessary security documents were executed on 11.03.1997; Defendant No. 2 created equitable mortgage upon his immovable property with the Assignor-IDBI by way of Memorandum of Entry dated 19.03.1997. On 22.10.1997, the Defendant Nos. 2 & 4 alongwith others pledged the shares in favour of Assignor - IDBI by executing an Agreement of Pledge of shares. The mortgage and hypothecation was created by Defendant No. 1 in favour of Assignor - IDBI, the Assignor - IDBI's charge was registered and filed with - Registrar of Companies. Thereafter, pursuant to the direction of the Hon'ble High Court at Calcutta, Official Liquidator took possession of the assets of Defendant No. 1 and sold the same and a sum of Rs. 2.00 crores are lying with the Official Liquidator. Defendant No. 1 is the borrower, has taken Loans from Assignor - IDBI and Defendant Nos. 2, 3 & 4 executed the Deed of Guarantee, and Defendant No. 5 is another secured creditor of Defendant No. 1 - company (in liquidation) and filed a recovery suit against the Company (in liquidation) which has been pending for disposal; hence the Defendant Nos. 2, 3 & 4 are liable to repay the same with interest. Equitable mortgage was created by Defendant No. 2 on 04.06.1996 and 19.03.1997 and acknowledgement of debts & liabilities was made in the O.T.S. vide letter dated 23.05.2002, and the O.A. was filed on 09.02.2007; the claim of the Applicant - F.I. is within limitation. This Tribunal has jurisdiction to adjudicate the claim/O.A. filed by the Applicant Bank.

13. After going through the Statements of Account I find that the debit balances shown in First Loan (including unapplied interest and liquidated damages) is Rs. 25,80,80,881.00 and in Second Loan (including unapplied interest and liquidated damages) is Rs. 30,81,35,367.00 alongwith Expense Account of Rs. 1,91,300.00 as on 31.12.2006, making total outstanding balance is Rs. 56,64,07,548.00 (Rupees fifty six crores sixty four lacs seven thousand five hundred forty eight) as on 01.01.2007, which is the amount claimed in the O.A. I allow the claim made by the Applicant Bank, in their O.A. I find that as per the Hon'ble BIFR's order dated 06.06.2003 winding up of Defendant No. 1 - Company was recommended, and as per the direction of the Hon'ble High Court at Calcutta, Official Liquidator sold the assets of the Company (in liquidation) and a sum of Rs. 2.00 crores are lying with the Official Liquidator. Applicant - F.I. has prayed the future interest as per agreed rate, but in the Loan Agreement, no rate of interest has been mentioned. Upon perusal of the Statements of Account I note that in both Term Loan Accounts the unapplied interest from April 1997 to October 2006 (more than 9 years) has been added which is more than the principal amount (ledger outstanding); this is against the guidelines and the principles laid down by the Hon'ble Supreme Court in the decision passed in the matter of Central Bank of India Vs. Ravindra : AIR 2001 SC 3095). The claim of the Applicant Bank in present T.A./OA has been highly increased because of long delay and charging of high rate of interest for these long years. This is against the public policy as h

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as been observed by the Hon'ble Supreme Court in para 46 of the above said Judgment. As the matter is very old and Applicant Bank has delayed filing of O.A. and has prayed very high rate of interest in the T.A.; therefore, in my view, the pendente lite & future interest @ 8% per annum simple, be allowed to the Applicant Bank from 01.01.2007. ORDER 14. Under the circumstances, Applicant Bank is entitled to recover the dues as claimed/modified in the O.A. from the Defendant Nos. 1 (in liquidation), 2, 3 & 4; it is hereby held and ordered by this Tribunal that- (1) The Defendant Nos. 1 (in liquidation), 2, 3 & 4 are liable to pay to the Applicant Bank a sum of Rs. 54,64,07,548.00 (Rupees fifty four crores sixty four lacs seven thousand five hundred forty eight) together with simple interest @ 8% per annum on the above-said amount from 01.01.2007, till the date of realization and costs of the O.A. The liability of the Official Liquidator representing Defendant No. 1 shall be restricted to the extent of assets of Defendant No. 1 - Company under liquidation. (2) The Defendant Nos. 1 (in liquidation), 2, 3 & 4 are given a time of thirty days from the date of this Final Order/Judgment for repayment of the above mentioned dues. In case the Defendants fail to pay the said dues within the said time, the Applicant Bank is entitled to recover its dues by sale of mortgaged immovable properties of Defendant No. 2 (described at pages 26, 27 & 28 of the O.A.) mentioned in the O.A., and also proceed against the Defendant No. 2, 3 & 4 to recover the dues from their personal assets and properties, in accordance with law; (3) Ld. Registrar of this Tribunal is directed to place the Recovery Certificate in terms of the Final Order/Judgment for the issuance of the same against the Defendants [Defendant Nos. 1, (in liquidation), 2, 3 & 4] in favour of the Applicant Bank under Section 19 (22) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Accordingly, the Original Application is allowed. The copies of the Final Order/Judgment be given to the parties. File be consigned to record room. Order pronounced in open Tribunal on this, the 17th day of February, 2017.
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