1. This Applicant Bank filed the present Original Application Under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 against Defendants for recovery of a total sum of Rs. 15,75,065.46Ps. (Rupees fifteen lakhs seventy-five thousand sixty-five and paise forty-six only) alongwith further interest @17.50% p.a. compounded with monthly rests plus penal interest 2.00% p.a. from 01-07-2008 till the date of realization and in default for sale of mortgaged and hypothecated properties as described in the schedule to OA.
2. (i) The brief facts of the case as made out in the Original Application by the applicant is that the Defendant No. 1 M/s. Vijay Distributors a proprietary concern represented through its proprietor Shri Vijaykumar Shantilal Jain who was engaged in its business of wholesale products of medicines. Defendant No. 1 was in need of financial assistance for its business purpose therefore its proprietor Shri Vijaykumar Shantilal Jain approached the applicant bank. At the request of defendants, the applicant bank sanctioned the Term loan of Rs. 25 Lakhs @16% p.a. with quarterly rest to the Defendant No. 1 vide sanction letter dated 14th March, 2000. In order to secure the said loan facility availed by the defendant No. 1, the defendants have executed Deed of Declaration dated 07-03-2000, Demand Promissory Notes, Hypothecation Agreement of Goods, Debts and Assets on 16-03-2000. Defendant Nos. 2 and 3 executed separate individual Letter of Guarantee to the loan facility availed by the defendant No. 1.
(ii) The said cash credit limit was reduced to Rs. 20 lakhs on 07-02-2003. To secure said loan amount, defendant No. 1 has executed demand promissory note on 07-02-2003 and the defendant Nos. 2 and 3 executed separate individual letter of guarantee of the said loan facility availed by the defendant No. 1. Defendants have also executed various security documents on 07-03-2003. The defendants had agreed to pay interest @14.75% per annum with monthly rest.
(iii) On 31-10-2003 the cash credit facility was reduced to the extent of Rs. 7 Lakhs and Term Loan of Rs. 2,79,451/-. To secure said loan amount, defendant No. 1 has executed demand promissory note on 31-10-2003 and the defendant Nos. 2 and 3 executed separate individual letter of guarantee of the said loan facility availed by the defendant No. 1. Defendants have also executed various security documents on 31-10-2003. The defendants had agreed to pay interest @14.75% per annum with monthly rest. Defendant No. 3 has executed memorandum in respect of the immovable property in favour of the applicant bank on 06-06-2000. As the account of the defendant has been classified as Non-Performing Asset, the applicant bank has issued securitization notice on 06-08-2015 for attachment and sale of the said immovable property. The applicant bank has also issued legal notice to defendant Nos. 1 to 4 mentioning that the first charge is created in favour of the applicant bank and the bank has first right to take over the possession of the immovable property.
(iv) The applicant bank further submits that it has also issued a letter through its Manager, Main Branch at Jalgaon in favour of the Police Inspector, City Police Station, Jalgaon stating that the defendant Nos. 1 to 3 have committed fraud and have mortgaged the said property with the Jalgaon Peoples Co-Operative Bank by obtaining fraudulently No Dues Certificate. Jalgaon City Police Station lodged the FIR on 01-08-2006 on the complaint given by the applicant bank and the investigation was also going on, on the basis of the said FIR. It is submitted by the applicant bank it has issued notice on 14-02-2008 for recovery of the dues from the defendants. The defendant No. 4 has not asked for the status from the applicant bank and has created the charge on the said property, which is fault on the part of the defendant No. 4 by not following the proper procedure before disbursing the said loan proposal. Despite the charge of the applicant bank, the defendant No. 4 has sold out the said property. It is very clear from the documents on record that the defendant Nos. 1 to 3 created charge on the property bearing Plot No. 12 Survey No. 431/2-B/1+2+3 admeasuring 160.25 sq. mtrs. situated at village Mehrun, Tq. & District Jalgaon (presently CTS No. 2604 of City Jalgaon) and eastern side portion plot admeasuring 332.94 sq. mtr. out Plot No. 8 on Survey No. 284/2 situated at Jalgaon presently CTS No. 8034 by executing an equitable mortgage and by depositing the title deed in favour of the applicant bank on 06-06-2000. The charge of the applicant bank is continued till today on the said property. The applicant bank submits that the above said properties mortgaged with the applicant bank and there is a charge subsisting that the defendant Nos. 1 to 4 by concealing the said fact from the office of the defendant No. 4 obtained the loan from the said bank and also executed the mortgage in favour of the defendant No. 4. The defendant Nos. 1 to 3 with common intention mortgaged the said property in favour of the defendant No. 4 though there is subsisting charge of the applicant bank, fraudulently and with an intention to cause and wrongful loss to the applicant bank, defendant Nos. 1 to 3 committed such act. On enquiry with defendant No. 4 they have supplied the information by the letter dated 25-11-2005 stating that the defendant No. 1 told the authorities that he has paid the entire amount of loan to the applicant bank and there is no charge on the above said property and supplied one fabricated document while obtaining the loan from the defendant No. 4. It is also stated in the said fabricated document that the defendants have fully repaid said loan with interest and there are no dues from the defendant. The applicant bank has first right to have and take over the possession of the above mortgaged property of the defendants. The applicant bank has also asked for handing over the possession of the above said mortgaged property from defendant No. 4 for clearing the entire dues of the applicant bank as there is a first charge of the applicant bank but the defendant No. 4 failed to do so. The applicant bank stated that they have issued a letter in favour of The Jalgaon Peoples Co-Operative Bank stating that they are having dues to be recovered from the defendant Nos. 1 to 3. It is also submitted by the applicant bank that the defendants have also agreed to pay interest at the agreed rate or at such other minimum prescribed rate by the RBI from time to time. The applicant bank further stated that from 14-03-2000, 16-02-2003 and 28-10-2003 it has applied interest to the cash hypothecation loan account @16% p.a. with monthly/quarterly rest however the same has not been debited to the loan account of the defendant No. 1 since the account was classified Non-Performing Asset w.e.f. 30-03-2005. The applicant bank further stated that it has charged the interest to the loan account of defendant No. 1 at the agreed rate from the date of disbursement till filing of the original application. As the defendants executed promissory note and the acknowledgement of the interest rate applied to the loan account of the defendants, defendants cannot deny to pay the outstanding dues of the applicant bank. The defendant No. 1 through its proprietor namely Vijaykumar Shantilal Jain has executed balance confirmation on 31-03-2003, 05-01-2006 and 05-01-2006.
3. The Defendant No. 3 Shri Shantilal Hiralal Jain passed away thereby leaving behind him his legal heirs D-3-A to D-3-D.
4. It is submitted by the applicant bank that the Defendants have availed the said loan facilities and failed to keep up the repayment schedule, as such the account was classified as NPA. Inspite of demands made by Applicant the defendants have not regularized, and the applicant bank issued legal notice on 14-02-2008 calling upon the defendants to pay a sum of Rs. 7,13,914.46ps. and Rs. 2,18,010.00 alongwith further interest from 30-03-2005 + 2.00% penal interest but the defendants did not come forward to repay the same. The total claim of Applicant against defendant Nos. 1 to 4 jointly and severally to pay is Rs. 15,75,065.46Ps. alongwith future interest @ 17.50% per annum compounded with monthly rests plus penal interest 2.00% p.a. from 01-07-2008 till the date of realization of the entire dues under the Cash Credit and Term Loan facility. Hence, the Original Application.
5. Defendant No. 1 to 3 filed their written statement at Exhibit-36. Disputing the claim of Applicant bank, Defendants No. 1 to 3 filed reply affidavit vide Exhibit-51. Defendant No. 4 filed its written statement at Exhibit-33 and Amended written statement at Exhibit-44. Defendant No. 4 filed its reply affidavit at Exhibit-52.
(i) The defendant No. 1 contended in his reply affidavit that the applicant bank has shown the account of defendant No. 1 of NPA on 30-03-2005 on that date account extract of the applicant bank shows the balance figure Rs. 7,95,035.46Ps. hence on 30-05-2005 the account became NPA the interest of that cannot be charged. The claim amount is not exceeding Rs. 10 lakh hence this Tribunal has no jurisdiction. The contents of para 4 denied by the defendant No. 1 as the original application is barred by limitation. The applicant bank has obtained signature on blank papers and forms and the balance confirmation never signed on 05-01-2006 hence denied. The alleged notice dated 14-02-2008 was not served on the defendants and it does not have inward/outward number hence denied. The defendant No. 1 submit that the allegations about fraud are false and hence denied. The complaint to Police Inspector, City Police Station, Jalgaon is false. The criminal complaint and criminal case is pending and it would be proper to stay the present proceeding till the disposal of criminal case.
(ii) It is further submitted by the defendant No. 1 that there is a dispute before the Co-operative Court Jalgaon bearing Dispute No. 169/1994 relating to Plot No. 112 of Gat No. 431 situated at Mehrun, Tal. & Dist. Jalgaon. Similarly, Smt. Padmabai Punamchand Kucheriya and others have filed Spl.C.S. bearing No. 323 of 2005 in the Court of Civil Judge Senior Division, Jalgaon and this suit also relates to Survey No. 431/2B/1+2+3 and Plot No. 12 therein situated at Mehrun, Tal. & Dist. Jalgaon. The said suit is filed against the present defendants or declaration and injunction and is pending. It is submitted by the defendant No. 1 that the defendant No. 4 has filed dispute against the present defendant Nos. 1 to 3 in the Co-operative Court, Jalgaon bearing dispute No. J/655/2006 and in that the defendant No. 4 has taken the possession of "Hira Laxmi" house bearing Survey No. 8034, Plot No. 8, situated at Vijay Colony, Jalgaon and Plot bearing No. 12, S. No. 431/2-B/1+2+3 of Mehrun, Tal. & Dist. Jalgaon.
(iii) The defendant No. 1 further submits that the applicant bank has seized the shop of defendant No. 1 alongwith the goods and the inventories made thereof and the said inventories are with the applicant bank. The cost of medicine in the shop is near about Rs. 1,82,805/- and from that date of seizure the goods and stocks are in the custody of the bank. Thus, the applicant bank is liable for set-off of Rs. 1,82,805/- with interest of 24% p.a. in the amount of goods seized from the date of seizure i.e. 24-11-2005 and it may be deducted from the amount of loan. It is contended by the defendant No. 1 that the applicant has not calculated interest rate as per the norms and standards of RBI. It is further submitted by the defendant No. 1 that the applicant bank has suppressed material facts from this Tribunal about the attachment and taking possession of the mortgage properties by the defendant No. 4. Furthermore, the applicant has also issued a vague notice in daily Lokmat dated 15-01-2006. The defendant No. 1 further submits that the documents alongwith claim affidavit are not true and the account extracts and entries therein are disputed in the written statement and the same are not proved. Lastly, in the totality of circumstances the defendant No. 1 prayed for dismissal of the original application with costs.
(iv) The defendant No. 4 submitted in its reply affidavit Exhibit-52 that all the contents, allegations and averments made in the original application are totally false, illegal and misleading and the same are denied in toto. It is further submitted by the defendant No. 4 that it is not concerned with the transactions of the applicant bank with the defendant Nos. 1 to 3. There is nothing outstanding and recoverable from the defendant No. 4 bank. There is no any cause of action in the O.A. against the defendant No. 4 bank hence O.A. is required to be dismissed in limine.
(v) It is further submitted that the property is not mortgaged with applicant bank and there was no charge or encumbrance created by the applicant on the plot No. 8, CTS No. 8034 at Jalgaon belonging to defendant No. 2. There was no entry in 7/12 or City Survey Extracts i.e. property cards in this respect. The defendant No. 1 has taken loan of Rs. 40 lakhs from the defendant No. 4 bank and for the same a registered mortgage deed was executed by the defendants in favour of the defendant No. 4 on 13-03-2003. Thereafter the defendant No. 1 had repaid Rs. 25 lakhs to the applicant on 15-03-2003 and had produced such certificate with the defendant No. 4. It is further submitted by the defendant No. 4 that since the loan of the defendant No. 4 was defaulted it had invoked the provisions of the Securitization Act, 2002 and issued demand notice u/s. 13(2) to the respondent borrowers. Since the loan was not repaid in 60 days, the defendant No. 4 has taken over possession of the said property on 28-09-2005 under Section 13(4) of the SARFAESI Act and the said possession notice was duly published in two Newspapers i.e. Dainik Lokmat and Dainik Sakal on 29-09-2005. Thereafter, it has published public notice for sale on 10-10-2005 in the said cited newspapers and it was decided to sale the property on 17-11-2005 per the provisions of Securitisation Act, 2002.
(vi) It is further submitted by the defendant No. 4 that on 12-11-2005 two purchasers i.e. Mr. Lalit Girdhahr Attarde and Mrs. Usha Krishna Dhake, filed tender with it for purchase of the property at the price of Rs. 15,13,500/- and the same was accepted by the board of directors of the defendant No. 4 in its resolution dated 17-11-2005 and the decision of the same was communicated to the both purchasers by letter dated 19-11-2005. However, both of the purchasers inform the defendant No. 4 bank that they do not want to purchase the property and requested to refund of the amount of Rs. 15,13,500/-. Again, on 10-03-2006 the said purchasers issued letter to the defendant bank and cancelled their offer for sale and requested to refund the amount. The Board of Directors of the defendant No. 4 by its resolution dated 22-04-2006 decided to refund the amount to the said purchasers and resolved to cancel the said transaction. It is further submitted by the defendant No. 4 that after cancellation of the above sale, one Mr. V.G. Kochure had given offer to purchase the property at the price of Rs. 15,14,000/- on 15-06-2006 but he has withdrawn his offer due to his financial problems by letter dated 08-08-2006. Thereafter, one Mr. Subhash K. Singh submitted his offer on 09-10-2006 for purchase of the property at the price of Rs. 15,51,000/- and the same was accepted by the board of defendant No. 4 bank on 13-10-2006 and the said decision was communicated to Mr. Subhash K. Singh by letter dated 14-10-2006 and the sale certificate was executed and registered on 05-06-2007. The applicant bank is aware of the action under the Securitization Act, 2002, however, they have not challenged the correctness or legality of the same and thus the measure of sale by the respondent has attained finality.
(vii) It is further submitted by the defendant No. 4 that one Sushilkumar Nahata Urban Co-op. Bank Ltd. Bhusawal, Dist. Jalgaon was having first charge/encumbrance on the same property i.e. Plot No. 8, CTS No. 8034 at Jalgaon for an amount of Rs. 5,00,000/-. The said Nahata Bank had also given loan to the defendant Nos. 1 to 3 and these defendants executed registered Mortgage Deed in favour of the said Nahata Bank on 21-03-1997 bearing No. 1473 and correction deed No. 1486. The said registered mortgage deed of Sushilkumar Nahata Urban Bank was prior to the alleged equitable deed/declaration dated 06-06-2000 executed in favour of the applicant bank. It further states that the said Bank vide its letter dated 13-10-2005 pointed out the above position to the defendant No. 4. The said bank after discussions, vide its letter dated 01-02-2007 informed the D-4 bank that it is ready to accept Rs. 2,80,000/- in respect of their charge and rights over the property. Therefore, the D-4 Bank has paid an amount of Rs. 2,80,000/- to the said Sushilkumar Nahata Urban Bank on 20-02-2007 out of the sale proceeds and the remaining amount was credited to the loan account of the defendant No. 1. After payment of Rs. 2,80,000/- Sushilkumar Nahata Urban Bank has executed release deed which is registered at Rs. No. 595/07 and the same is produced on record. It is further submitted by the Defendant No. 4 that the alleged equitable mortgage deed dated 06-06-2000 is not signed by defendant Nos. 1 to 3 in favour of the applicant bank hence not believable. It is further contended by the defendant No. 4 that the applicant has not served demand notice under Section 13(2) of the Securitisation Act, 2002 in respect of the Plot No. 8, CTS No. 8034 to the respondent No. 4 bank and the defendant No. 1 was paid Rs. 25 lakhs to the applicant on 15-03-2003 and such certificate was also produced by the defendant No. 1 with the defendant No. 4 bank. The defendant No. 4 denied the execution of mortgage deed dated 06-06-200 in favour of the applicant bank.
(viii) It is further submitted by the defendant No. 4 that it has filed a dispute No. 655/2006 against M/s. Vijay Distributors and others for the recovery of their loan before the Hon'ble Cooperative Court, Jalgaon and the same is pending. Lastly, the defendant No. 4 prayed that applicant bank has failed to prove its rights in the property at Plot No. 8, CTS No. 8034 at Jalgaon and has failed to prove its case and the same is liable to be.
6. Defendant Nos. 3-A to 3-D were set ex-parte on 12.09.2014.
7. The Applicant bank in support of its claim, filed Evidence on Affidavit duly sworn in by Mr. Harischandra Sarjerao Zanje, as AW-1, and through him marked 32 documents as A-Exh-89 to A-Exh-117. As against this, the defendants did not choose to adduce any evidence on their behalf in support of their contentions. They also did not choose to cross examine the AW-1 to controvert his Chief Evidence.
8. I have perused the documents placed on record.
9. Now, the points that arise for consideration are:
(i) Whether the Applicant Bank has proved its claim as made in OA against the defendants?
(ii) To what relief?
10. As stated supra though defendant No. 1 to 3 filed written statement, denied the execution of
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Mortgage Deed and execution of loan documents in respect of OA claimed in OA schedule property. The defendant No. 1 has filed reply affidavit to substantiate their contentions but not have chosen to cross examine AW-1. The defendant No. 4 bank also filed written statement and reply affidavit to substantiate its contentions but not have chosen to cross examine AW-1. Under such circumstances, the evidence of AW-1 coupled with recitals A-Exh-89 to A-Exh-117 stood unchallenged and unrebutted. The defendant No. 2 remained ex-parte. Therefore, the OA claim deserved to be allowed against the defendant Nos. 1 and 2, 3-A to 3-D and Defendant No. 4. 11. In the result, the present Original Application is allowed with costs, as under: (A) The Defendant Nos. 1, 2, Defendant Nos. 3-A to 3-D and 4 are jointly and severally liable to pay a total sum of Rs. 15,75,065.46Ps. (Rupees fifteen lakhs seventy-five thousand sixty-five and paise forty-six only) with pendent lite future interest @12% p.a. with simple rest in both Term Loan and Cash Credit account from the date of application till the date of realization. (B) The Applicant Bank is entitled to proceed against the mortgaged and hypothecated properties as described in Schedule to the O.A. towards realization of their dues; (C) The Applicant Bank is entitled to proceed against the person and properties of Defendant Nos. 1, 2 and 4 towards realization of the debt due. (D) The claim against Defendant No. 3-A to Defendant No. 3-D being legal heirs is restricted to the estate of Defendant No. 3 devolved on them. (E) The Applicant Bank is entitled to the costs of the OA, which include Advocate Fees prevailing in the State. (F) The Applicant bank is directed to file a cost memo within two weeks from the date of receipt of this order. (G) Issue recovery certificate accordingly. (H) Communicate a copy of this order to the parties concerned. (Dictated to the Steno, transcribed by him/her, corrected, signed and pronounced by me in the open court on this the 4th day of February, 2020)