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UCO Bank V/S Shree Durga Agro Oils Pvt. Ltd. and Others.

    O.A. 541 of 2015

    Decided On, 29 May 2017

    At, Debts Recovery Tribunal Allahabad

    By, THE HONORABLE JUSTICE: VINAY GOEL
    By, (PRESIDING OFFICER)

    For Petitioner: V.K. Srivastava



Judgment Text


1. This Original Application has been filed by the Applicant Bank under Section 19 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 against the defendant Nos. 1 to 10 for recovery of Rs. 7,13,53,768.02 (Rs. Seven Crores, Thirteen Lac, Fifty Three Thousand, Seven Hundred Sixty Eight and paise two only) together with pendente lite & future interest @ 11.95% (inclusive of 2% penal interest) per annum with monthly rests from 01.10.2015 till realization of the dues, cost and other relief as stated.

2. The facts of the case as contained in the Original Application of Applicant Bank are that defendant No. 1 is a FM, Ltd. Company through its Managing Director defendant No. 2 and directors defendant No. 3 to 6 authorized to obtain financial assistance from the applicant bank vide Board Resolution dated 10.6.2006 approached the Applicant Bank to obtain financial assistance. The Applicant Bank considered the proposal and worth of the security offered and sanctioned a Term Loan of Rs. 365.00 Lacs and Cash Credit Limit of Rs. 225.00 Lac vide sanction letter dated 04.05.2005 to defendants being Managing Director, In consideration thereof and in order to avail the above sanctioned Credit facilities, the defendant No. 2 director for and on behalf of defendant No. 1 as borrower and defendant No. 2 to 6 in individual personal capacity and defendant Nos. 7 to 10 as guarantors executed Bank's standard loan documents and Guarantee Agreement on 05.05.2005 respectively. To further secure the aforesaid credit facilities, the defendant no, 2 to 10 created equitable mortgage of their immovable properties i.e., (A) sale deed No. 2472, area 86044.49 sq. ft. (B) sale deed No. 2477, area 79164.54 sq. ft. owned by defendant No. 1 (C) sale deed No. 1498, area 100 sq. yard. Owned by Sri Nitesh Kumar defendant No. 2 (D) sale deed No. 1032, area LOO Kathha owned by Smt. Meena Devi Sangita and Deepika defendant Nos. 4, 8 & 9 respectively, (E) sale deed No. 1031, area 2.00 Kathha owned by Smt. Meena defendant Nos. 4, (F) sale deed No. 1449, area 5.00 Kathha owned by Sri Raj Shekhar defendant no, 10, (G) sale deed No. 1491, area 5.00 Kathha owned by Sri Raj Shekhar defendant No. 10, (H) sale deed No. 10065, area 37 Decimal owned by Sri Nitesh Kumar defendant No. 2, (i) sale deed No. 1008, area 3.00 Kathha, 2 Dhur, 10 Dhurki owned by Sri Vinod Kumar defendant No. 5, (J) sale deed No. 1009, area 4.00 Kathha, 2 Dhur, 10 Dhurki owned by Smt. Deepika Devi defendant No. 9, (K) sale deed No. 9335, area 16 Dhur owned by Nitesh Kumar defendant No. 2, (L) sale deed No. 9753, area 3 Dhur & 4 1/2 DK owned by Smt. Meena Devi defendant No. 4, (M) sale deed No. 5869, area 17.00 Dhur, 1 1/2 DK owned by Smt. Meena Devi defendant No. 4, (N) sale deed No. 5112, area 03.00 Dhur, 4 1/2 DK owned by Sanjeev Kumar defendant No. 7(0) sale deed No. 4469, area 16.00 Dhur owned by Smt. Sangeeta Devi defendant No. 8, (P) sale deed no, 4468, area 16.00 Dhur, owned by Sri Vinod Kumar defendant No. 5, (Q) sale deed No. 5113, area 16 Dhur, owned by Sri Sanjeev Kumar, defendant No. 7, (R) sale deed no, 9334, area 16 Dhur, owned by Smt, Sangeeta Devi, Defendant No. 8, (S) sale deed No. 9333, area 16 Dhur, owned by Sri Sanjeev Kumar, defendant No. 7, (T) sale deed no, 5870, area 17 Dhur & 1 1/2 DK, owned by Smt. Deepika Devi, defendant No. 9, (U) sale deed No. 5871, Area 17 Dhur 1 1/2 DK, owned by Sangeeta Devi, defendant No. 8, [(V) Raw materials RB Raw & Boiled, in process RB mustard Cake Diesel, Hexane, Husk & Finished product of R.B. Oil, Mustard Oil, Neem Oil, Neem Org Manure & Dorbalongies all receivables, plant and machinery including factory building, AC, generator set, boiler and all office equipment] by depositing original title deeds and hypothecation in favour of the applicant bank.

3. The defendant No. 1 being Managing Director of defendant No. 1 vide its letter dated 01.11.2006 requested the applicant bank for enhancement of existing Cash Credit Limit of Rs. 225 lacs upto at least Rs. 400 lacs. The applicant bank considered the request of the defendants and enhanced the said Cash Credit Facility from Rs. 225 lacs to Rs. 400 lacs.

4. Upon sanction and in order to avail the said credit facilities, the defendant Nos. 2 to 6 as Managing Director/Directors of defendant No. 1 as borrower and defendant No. 2 to 6 in personal capacities and defendant Nos. 7 to 10 as guarantors signed and executed the Bank's Standard Loan Documents and guarantee agreement on 01.12.2006. The defendant Nos. 2 to 10 in order to further secure due repayment of the applicant bank extended mortgage over their properties already mortgaged with the bank for the enhanced limit of Rs. 400 lacs.

5. Again, the defendant Nos. 2 being Managing Director of defendant No. 1 vide its proposal dated 23.8.2007 proposed and requested the applicant bank for sanction of new term loan and enhancement of existing Cash Credit Limit of Rs. 400 lacs. The applicant bank considered the request of the defendants and sanctioned the Term Loan (1) [existing) Rs. 265 lacs at run down basis Term Loan -2 (New) Rs. 118 lacs, Cash Credit Limit - Rs. 500 lacs enhanced from Rs. 400 lacs vide sanction letter dated 29.12.2007 favour of them.

6. Upon sanction and in order to avail the said credit facilities. the defendant Nos. 2 to 6 as Managing Directors of defendant No. 1 as borrower and defendant No. 2 to 6 being Managing Director/Directors and defendant Nos. 7 to 10 as guarantors signed and executed the Bank's Standard Loan Documents and guarantee agreement on 07.3.2008.. The defendant Nos. 2 to 10 in order to further secure due repayment of the applicant bank extended mortgage of their properties already mortgaged with the bank for new enhanced limit and term loan of Rs. 883 lacs.

7. The defendant Nos. 2 being Managing Director of defendant No. 1 vide its letter dated 14.12.2009 requested the applicant bank for renewal of credit limits such as Term Loan -1 and Term Loan - 2, enhancement of cash credit limit upto Rs. 700 lacs from existing Rs. 500 lacs etc. The applicant bank considered the request of the defendants and sanctioned by enhancing cash credit limit upto Rs. 675 lacs and Term Loan - 1 Rs. 142.32 lacs and Term Loan - 2 Rs. 42.73 lacs in favour of defendant No. 1.

8. Upon sanction and in order to avail the said credit facilities, the defendant Nos. 2 to 6 as Managing Director/Directors of defendant No. 1 as borrower and defendant Nos. 2 to 6 in personal capacities and 7 to 10 as guarantors signed and executed the Bank's Standard Loan Documents and guarantee agreement on 18.1.2010. The defendant No. 2 to 10 in order to further secure due repayment, extended mortgage of their properties already mortgaged for enhanced/new limits.

9. The defendant Nos. 2 as Managing Directors of defendant No. 1 again requested for renewal of credit facilities and the applicant bank considered the request of the said defendants renewed/reviewed the fund based cash credit limit of Rs. 675 lacs at existing level & term loan -11 of Rs. 6.81 lacs reviewed at rundown level as per balance as on 29.1.2013 vide sanction letter dated 08.2.2013.

10. Upon sanction and in order to avail the said enhanced credit facilities, the defendant Nos. 2 as Managing Director of defendant No. 1 as borrower executed the Bank's Standard Loan Documents and guarantee agreement on 29.10.2014.

11. It is further submitted that out of properties mentioned in schedules, the property situated at B-82, 2nd Floor, Amar Colony, Lajpat Nagar, New Delhi was released at the request of the Directors has been sold out by the defendants and the defendants by acknowledging the account and dues deposited the sale proceeds in accounts of defendant No. 1 after adjusting proceeds of Rs. 89 lacs in Cash Credit Account, the bank has returned the concerned sale deed to defendant No. 3 as per authority letter of defendants dated 31.8.2015/01.9.2015.

12. The defendant Nos. 2 to 6 as Managing Director/Directors of defendant no, 1 availed the aforesaid credit facilities but failed to repay the dues of the Bank as per agreed terms, they failed to adhere to the financial discipline of the applicant bank, the account of the defendant No. 1 became irregular and sticky. The applicant bank made repeated request for repayment of dues but defendants did not paid any heed. The applicant bank issued demand notice U/s 13(2) of SARFAESI Act on 14.8.2015 to the defendants but the defendants failed to comply with the said notice. Despite all these, the defendants failed to liquidate bank's dues. All these acts and conduct on the part of the defendants were contrary to the terms and conditions of the documents signed and executed by defendants. Accordingly the Applicant Bank has moved this O.A. to recover public money.

13. On the date of filing of O.A. applicant bank claimed outstanding dues in loan account Rs. 7,13,53,768.02 (Rs. Seven Crore Thirteen Lac Fifty Three Thousand Seven Hundred Sixty Eight & Paise Two only) together with pendente lite and future interest @ 11.95% per annum with monthly rests from 01.10.2015 in favour of the applicant bank.

14. Soon after the registration of the case the defendants were summoned through registered post with A/D. The defendant Nos. 1 to 6 appeared through counsels and filed their respective written statements, whereas the defendant Nos. 7 to 10 was facilitated ex parte proceedings due to their non appearance and subsequently the defendants Nos. 1, 2, 3, 4, 5 & 6 have admitted their liability and agreed to pay the dues of the bank within certain period so I find no merits to discuss the defence as taken in written statements.

During the course of hearing on 20.05.2017 and 25.05.2017 Ld. counsel for the parties made submissions which have been recorded in the order dated 20.05.2017 & 25.05.2017. The said orders is being reproduced as under: -

"O.A. 541/15

20.5.2017

The case is taken up on an application moved on behalf of defendant No. 2

The case was reserved for pronouncement of judgment on 24.4.2017 and today defendant No. 2 came from Varanasi in person for himself and as authorized person on behalf of defendant No. 1 along with Sri Ashish Kumar Srivastava and submitted that he intends to pay entire dues of the bank within one year.

He further submitted that he admit loan and security interest created in favour of bank and also admits the claim of the bank as raised in this O.A. He further submitted that defendants intends to liquidate the dues of the bank provided bank may give concession in interest (a) 10% simple. He further submitted that he would pay Rs. 25.00 lacs each in first three months from 1.6.2017 and thereafter he would pay regular equal monthly installments of Rs. 70.00 lacs each from 1.09.2017.

He further submitted that in the event of default defendants will pay the entire dues of the bank as claimed in the O.A. with agreed rate of interest. However, on deposit of 70% of the total dues, bank may be directed to give time extension of further 06 months.

Nobody has appeared on behalf of the bank and admission so made is taken on record. The case is adjourned awaiting presence on behalf of the bank,

It is made clear that defendants would be bound by the statement made today and it can be used against them on merits also.

Post the matter on 22.5.2017.

"O.A. 541/15

25.5.2017

Ld. Counsel Sri V.K. Srivastava is present on behalf of the applicant bank.

Ld. Counsel Sri Asish Kumar Srivastava is present on behalf of the defendants.

Ld. Counsel Sri Sanjay Gupta is present on behalf of defendant No. 6.

Ld. Counsel Sri Brijesh Keserwani is present on behalf of defendant No. 3, 4 & 5.

Remaining defendants are already ex parte,

Counsel for the bank submitted on the basis of bank's instruction that bank is ready to receive amount as proposed on behalf of the defendant No. 1 & 2 and further bank has given relaxation and bank is ready to receive amount of first three installments as under:-

(i) Rs. 15.00 lacs by 10.6.2017

(ii) Rs. 15.00 Lacs by 10.7.2017

(iii) Rs. 15.00 lacs by 10.8.2017

Thereafter the defendants would be liable to pay minimum monthly installments of Rs. 70.00 lacs from 1.9.2017. He further submitted that bank has no objection if O.A. may be decided on the basis of statement recorded on 20.5.2017 subject to above modification. He further submitted that in the event of default defendants will be liable to pay the entire dues of the bank as claimed in the O.A. with agreed rate of interest. The bank is also entitled to the cost of the original application.

Sri Sanjay Gupta counsel for defendant No. 6 and Sri Brijesh Keserwani counsel for defendant No. 3, 4 & 5 submitted that they have gone through the statement got recorded by defendant No. 1 & 2 on 20.5.2017 and they have also heard statement made today by the counsel for the bank and they submitted that they have instructions from their respective clients that O.A. may be decided on the basis of such admission and their defendants have also admitted such liability to pay dues of the bank,

I have heard the counsel for the parties and concluded.

The affidavit filed by the bank in support of O.A. and the affidavit filed on behalf of defendants in support of their pleadings are considered as evidence on their behalf.

Post the matter on 29.5.2017 for pronouncement of judgment."

The admission so made on behalf of defendant No. I to 6 is not binding on defendant No. 7 to 10, thus despite admission so made this Tribunal is under obligation to decide the claim of the Bank against defendant No. 7 to 10 on merits.

15. From the perusal of the records, it is evident that defendant Nos. 7 to 10 was provided with fair opportunity to contest the claim of the bank.

As the defendant No. 7 to 10 opted not to contest the case, so only point of consideration before this Tribunal is whether the Bank is legally entitled to the amount as claimed in Original Application on the basis of document and pleadings submitted by it before the Tribunal.

16. During the course of hearing counsel for the defendant Nos. 1 to 6 practically admitted the liability and I have considered the claim of the bank which is within time and applicant bank has prima-facie proved its documents as required under Section 19 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and bank has duly proved on record loan transaction, availment of loan, default, liability of defendants and mortgaged of properties.

17. In support the Original Application, the Applicant Bank has filed evidence on affidavit of PW-1 Ankit Rana, Chief Manager of the applicant bank.

18. Learned counsel of the Applicant Bank submitted that the Bank has duly proved all the documents on file as required under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and thereafter submitted that the defendant Nos. 2 to 6 are the willful defaulters as they availed the Credit facilities in the name of defendant Firm to their advantage but failed to maintain the financial discipline of the bank. The defendant Nos. 7 to 10 also failed to honour their commitments given in the guarantee agreement. I have gone through the loan documents, Exhibit A-1 to Exhibit A-77 of the Original Application and also considered the submission made by learned counsel for the Applicant Bank. Evidence produced by the Bank remains unrebutted. There is no reason to disbelieve the same. Even otherwise defendant Nos. 1 to 6 by their conduct admitted execution of loan documents & creation of security interest in favour of bank and their liability- Leaving aside such admission, I have considered the loan documents & pleadings, the bank has duly proved its case against all the defendants and their joint and several liability. I have considered the claim of the bank, the claim of the Applicant Bank is within time in view of execution of loan documents, mortgage of immovable properties, notice dated 14.8.2015 u/s. 13(2) of SARFAESI Act, 2002. As per claim of the bank on the date of filing of Original Application, the defendants were liable to pay Rs. 7,13,53,768.02 (Rs. Seven Crore Thirteen Lac Fifty Three Thousand Seven Hundred Sixty Eight & Paise Two only) and Applicant Bank has further claimed to pendente lite and future interest @ 11.95% per annum with monthly rests from 01.10.2015 till realization of the dues to which bank is entitled to.

19. As the defendant Nos. 1 to 6 have admitted the liability and to save valuable time and precious energy and to avoid the delay in recovery of the public money, 1 feel it convenient and justifiable to allow the present OA permitting time to the defendants to repay the entire dues within 12 months from 01.06.2017, The defendants will pay first three installments of Rs. 15.00 lacs by 10.6.2017, Rs. 15.00 Lacs by 10.7.2017 and Rs. 15.00 lacs by 10.8.2017 and thereafter defendants will pay minimum monthly installments of Rs. 70.00 Lacs per month from 01.09.2017. The liability of defendants is/will be joint & several and the mortgaged properties and other personal movable & immovable properties of defendants are/will be liable to be sold for recovery of amount due. However, if the defendants pay the amount within 12 months as per Recovery Certificate with costs, in that event defendants will be liable to pay interest @10% simple from the date of institution of O.A. till payment of entire dues. If the defendants fail to pay the amount due as per this order or commits two defaults, in that event the concession as granted in the interest and time shall be deemed to be withdrawn on commission of second default and defendants will be liable to pay the amount with interest as claimed supra i.e. @ 11.95% per annum with monthly rests for pendente lite & future period and further bank will be at liberty to enforce its rights to recover the amount due under Recovery Certificate by sale of hypothecated plant & machinery, mortgaged property and other personal movable and immovable properties of the defendants. The monthly installment will be payable in advance on or before 10th of every month and installment will start from 01.09.2017 apart from deposit of Rs. 15.00 Lacs thrice as stipulated supra.

20. As a result, the Original Application is allowed against the defendant Nos. 1 to 6 with cost on consent and ex parte against defendant Nos. 7 to 10. The Bank has proved the loan as well as hypothecation of assets, mortgaged of properties and liability of the defendants. The hypothecated assets and mortgaged properties are liable to be sold for the recovery of the amount due with interest and costs- The liability of the defendants will be joint, several and the other personal movables & immovable properties can also be sold for recovery of amount due.

It is, therefore ordered:

"(i) That the Original Application No. 541 of 2015 initiated by the Applicant Bank for issuance of Recovery Certificate to the tune of Rs. 7,13,53,768.02 (Rs. Seven Crore Thirteen Lac Fifty Three Thousand Seven Hundred Sixty Eight & Paise Two only) together with interest @ 11.95% per annum with monthly rests and costs hereby succeeds and is allowed jointly and severally against the defendant Nos. 1 to 10 with costs.. However, if the defendants pay the amount with costs within 12 months, in that event defendant will be liable to pay interest @10% per annum on simple basis from the date of institution of O.A. till final payment. The defendants will pay first three installments of Rs. 15.00 lacs by 10.6.2017, Rs. 15.00 Lacs by 10.7.2017 and Rs. 15.00 lacs

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by 10.8.2017 and thereafter defendants will pay minimum monthly installments of Rs. 70.00 Lacs per month from 01.09.2017. However, if the defendants fail to pay the amount due as per this order or commits two defaults, in that event on commission of second default the concession as granted in the interest and time shall be deemed to be withdrawn and defendants will be liable to pay the amount with interest as claimed supra i.e. @ 11.95% per annum with monthly rests for pendente lite & future period and further bank will be at liberty to enforce its right to recover the amount due under Recovery Certificate by sale of hypothecated stocks & assets, mortgage properties and other personal movable and immovable properties of the defendants. The installments will be payable in advance on or before 10th of every month and first installment will start from 01.09.2017 but defendants will be liable to pay Rs. 15.00 Lacs each in the month of June, July & August as mentioned in the body of the judgment. (ii) It will be the duty of the Bank to inform the Ld. Recovery Officer about the status of deposit. If the borrowers pay the amount strictly in terms of this judgment to avail the concession in that event Recovery Officer will not proceed further with the Recovery Certificate. However, if borrowers fails to pay the amount or commits default, the Recovery Officer will proceed with the Recovery Certificate to recover the public money as if the concessions given in the judgment have not been given and amount if any deposited will be liable to be adjusted towards the amount recoverable under the Recovery Certificate. (iii) Let a Recover Certificate be issued with memo of cost immediately u/s. 19(22) of Recovery of Debts Due to Banks and Financial Institution Act, 1993 together with the details of the properties (as detailed in O.A.), if any, by fixing 31.07.2017 before Ld. R.O., DRT, Allahabad. (iv) The defendants are hereby restrained by means of injunction from depleting, transferring, encumbering, alienating or in any way dealing with their properties/assets without first paying the claim of the Applicant Bank." Judgment is completed, pronounced in the open court.
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