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Union Bank of India V/S North East Region Housing Finance Company Limited and Others.


Company & Directors' Information:- NORTH EAST REGION HOUSING FINANCE COMPANY LIMITED [Active] CIN = U65922MZ2006PLC008256

Company & Directors' Information:- S V HOUSING PRIVATE LIMITED [Active] CIN = U70109DL2006PTC150816

Company & Directors' Information:- S M B HOUSING FINANCE LIMITED [Active] CIN = U65922DL2014PLC267087

Company & Directors' Information:- UNION FINANCE LIMITED [Strike Off] CIN = U65910GJ1994PLC023717

Company & Directors' Information:- G K S HOUSING LIMITED [Amalgamated] CIN = U45201TN1996PLC036147

Company & Directors' Information:- EAST INDIA CORPORATION LIMITED [Active] CIN = U61100TN1942PLC000704

Company & Directors' Information:- R. J. HOUSING PRIVATE LIMITED [Active] CIN = U45400WB2007PTC114792

Company & Directors' Information:- G C HOUSING PRIVATE LIMITED [Active] CIN = U45201DL2003PTC122011

Company & Directors' Information:- J. D. HOUSING PRIVATE LIMITED [Active] CIN = U45309PN2016PTC166622

Company & Directors' Information:- A T C (EAST INDIA) PRIVATE LIMITED [Active] CIN = U63090MH2000PTC126349

Company & Directors' Information:- B AND S HOUSING FINANCE PRIVATE LIMITED [Strike Off] CIN = U65929AS1996PTC004785

Company & Directors' Information:- D L HOUSING PRIVATE LIMITED [Active] CIN = U45400WB2009PTC135703

Company & Directors' Information:- G M K HOUSING PRIVATE LIMITED [Active] CIN = U74899DL1995PTC069486

Company & Directors' Information:- B B HOUSING PRIVATE LIMITED [Strike Off] CIN = U70109WB1997PTC084775

Company & Directors' Information:- A M HOUSING FINANCE LIMITED [Strike Off] CIN = U65922PB1996PLC017644

Company & Directors' Information:- M. P. HOUSING PRIVATE LIMITED [Strike Off] CIN = U45200UP2007PTC033329

Company & Directors' Information:- S V R HOUSING INDIA PRIVATE LIMITED [Strike Off] CIN = U45200AP2009PTC064511

Company & Directors' Information:- J HOUSING PRIVATE LTD [Active] CIN = U74899DL1980PTC010338

Company & Directors' Information:- G R E HOUSING PRIVATE LIMITED [Active] CIN = U70102AP2008PTC061004

Company & Directors' Information:- G M HOUSING PRIVATE LIMITED [Strike Off] CIN = U99999MH1994PTC076203

Company & Directors' Information:- D. H. HOUSING PRIVATE LIMITED [Active] CIN = U70102MH2012PTC237322

Company & Directors' Information:- K-HOUSING PRIVATE LIMITED [Strike Off] CIN = U45200TN2009PTC070655

Company & Directors' Information:- L R HOUSING PRIVATE LIMITED [Active] CIN = U70100TG2013PTC089981

Company & Directors' Information:- EAST INDIA FINANCE CO. PRIVATE LIMITED [Under Process of Striking Off] CIN = U27109WB1956PTC023294

Company & Directors' Information:- K N S HOUSING PRIVATE LIMITED [Active] CIN = U45400DL2007PTC167504

Company & Directors' Information:- M-D REGION INDIA PRIVATE LIMITED [Active] CIN = U74999UP2019PTC115616

Company & Directors' Information:- A K Y HOUSING PRIVATE LIMITED [Strike Off] CIN = U45400TG2007PTC056210

Company & Directors' Information:- UNION BANK OF INDIA LIMITED [Active] CIN = U99999MH1919PTC000615

    O.A. No. 889 of 2016

    Decided On, 03 February 2020

    At, Debts Recovery Tribunal Delhi

    By, THE HONORABLE JUSTICE: DHARMINDER SINGH
    By, (PRESIDING OFFICER)

    For Petitioner: Hemraj Siddharth, Ld. Counsel



Judgment Text


1. This original application has been filed by the applicant bank, on 25.11.2016 through Mr. K.K. Dhawan, Chief Manager under Section 19 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 against the defendants for recovery of a sum of Rs. 16,57,95,098/- (Rupees Sixteen Crores Fifty-Seven Lakhs Ninety-Five Thousand and Ninety-Eight Only) being principal sum interest calculated on the basis of contractual rate of interest under aforesaid credit/term loan facilities, adjudged as on 30.10.2016 together with pendente lite and future interest @ 14.15% w.e.f. from 31.10.2016 with monthly rests till its realization.

2. The brief facts of the case are that the defendant No. 1 is company and is also incorporated as NBFC and is into the Business of Providing Housing Loans to cater the shelter needs of people residing in hilly areas of north east, has been the principal borrower of the applicant bank and the defendant No. 2 is the company who have stood as a guarantor/mortgagor and defendant No. 3 to 4 are the guarantors to the credit facilities advanced in favour of the defendant No. 1. The defendant No. 1 borrower company has been banking since 2013 and availing various cash credit facilities since 2013 which have been modified from time to time and various loaning and security documents have been signed and executed in favour of the applicant bank on 28.11.2013 as set out below. The applicant bank considering the request of the defendant No. 1 Borrower Company vide letter of sanction dated 19.04.2013, 20.09.2013 and 14.11.2013 to the total tune of Rs. 20 Crores. In order to avail the aforesaid facility, the defendants executed certain loan documents such as loan agreement, etc.

3. It has been submitted by the applicant bank that in order to secure the aforesaid loan facilities the defendants created mortgage properties i.e. 1) Extension of Three Storey Building on Khata No. 407, being Khasra No. 25 Kha Min (0.0327 Hectares) and Khasra No. 25 Kh Min (0.0267 Hectares and Khata No. 236 Khasra No. 25 Kha Min (0.0149 Hectares) Total 743 Sq. Meters Kishanpur-V Dehradun, 2) Extension of Ground Floor DDA Flat No. 28/KG-III, Janta, Vikaspuri, New Delhi and 3) Extension of Entire First and Second Floor, DDA Flat No. 28/KG-III, Janta Vikaspuri, New Delhi.

4. It has further been submitted by the applicant bank that after availment of the aforesaid loan facility the defendants did not maintain the financial discipline and inspite of various demands of the applicant bank the defendants failed to regularize the account and in view of the same the account was declared as NPA. Thereafter, the applicant bank issued notice dated 25.05.2016 but the defendants failed to regularize the account leaving no option to the applicant bank except to file the present original application against the defendants.

5. Notices of this O.A. was issued to the defendants and despite service the defendant Nos. 1 & 2 have chosen to remain absent from the proceedings and proceeded ex-parte. Thereafter, the defendant Nos. 3 & 4 put appearance through Ld. Counsel and file the Written Statement but failed to file evidence and proceeded ex-parte.

6. In the written statement the defendants have raised objections such as that the defendant No. 1 had availed a loan facility from the applicant bank and received a loan of 15 Crores for utilizing the same to help build houses to the people of North East Region and accordingly small housing finances were given to the people of North East Region including the teachers under Sarva Siksha Abhiyan (SSA) of the Central Government living in various parts of North East Region including but not limited to the states of Manipur and Mizoram. After getting the loans, the same were disbursed to the small housing beneficiaries in the whole of North East Region Particularly to the salaried employees under the State and Central Governments including teachers under the SSA Scheme of Central Government for constitution, reconstruction, renovation, extension and purchase of houses. Accordingly, from repayment by the said small housing beneficiaries/loanees, the said loans were repaid regularly by the defendant No. 1 to the applicant bank. However, began to suffer problems recovering loans issued to its customers including the SSA teachers and other salaried customer when their salaries were not released on time by the respective Government departments so much so that the defendant No. 1 instantly faced problems in its loan repayments process to the applicant bank and the same were promptly informed to the applicant bank time to time and the defendant No. 1 regularly asked for extension of repayment term. The defendant No. 1 also requested for a period of moratorium submitting the reason behind poor repayment of loan was purely due to poor collection/recovery of small housing/loans from their beneficiaries and also due to poor cash flown and not due to transaction done on other purpose. Defendant No. 1 are doing their level best keeping in continuous touch and putting in their best efforts with the government officials for getting funds from the Central Government under SSA scheme so that their beneficiaries can be paid salary and they in turn get their loan recoveries too. The main area of operation of housing business of defendant No. 1 is in north east region states, particularly in Manipur and Mizoram, that too for hilly/difficult terrain, where, banking operation is lacking much. For providing shelters to the needy people and due to poor collection/recovery from the loanee including SSA teachers, as a result, the company was not able to pay the due amount of installments and interest inspite of all the best efforts by the company. Despite the above-mentioned difficulties, the applicant bank classified the account of defendant No. 1 as NPA on 31.12.2015 and there after the notice under section 13(2) of SARFAISI Act, 2002 was also issued on 25.05.2016. In order to settle the account, the defendant No. 1 approached the applicant bank and submitted an OTS proposal for an amount of Rs. 7.25 Cr. On 18.02.2017 putting request for its consideration and also requested to allow the sale of the three mortgaged properties through private sale. The defendant No. 1 also confirmed that the sale consideration from the private sale of the three mortgaged shall be deposited with the bank and further requested the Applicant Bank to issue NOC for this very purpose. The defendant No. 1 also requested for defendant of legal action. It is pertinent to mention here that the OTS dated 18.02.2017 was not considered by the Applicant Bank. However after detailed discussions and after meeting with Regional Manager, of the applicant bank on 16.03.2017 and his assurance, the defendant No. 1 submitted a enhanced OTS proposal for an amount of Rs. 8.25 Crores on 17.03.2017, wherein the defendant No. 1 again request for its consideration also again requested to allow the sale of the three mortgaged properties through private sale. The defendant No. 1 also again confirmed that the sale consideration forms the private sale of the three mortgaged shall be deposited with the bank and further requested the applicant bank to issue NOC for this very purpose. The defendant No. 1 again requested for defendant of legal action. The said enhanced OTS proposal is still lying under consideration with the applicant bank. It may be submitted that despite the repeated request and enhanced proposal by the defendant No. 1 the applicant bank has not responded any communication so far till date and instead approached this tribunal against the defendant No. 1. It is further submitted that the applicant bank has neither accepted the OTS proposal nor rejected the same. In furtherance of the said OTS proposal, the defendant No. 1 deposited even after the declaration of the said account NPA by the applicant bank. The defendant No. 1 is in process of making arrangements to deposit the remaining amount and incase defendant No. 1 fails to make arrangements to deposit the remaining amount, the same shall be paid by selling the mortgaged property with the consent of the bank, sudden declaration in respect of demonetization of the currency, the entire economy came to a halt and all the process suddenly came to a standstill. Demonetization also very badly affected the efforts of the defendant No. 1 in settling the loan account, the present O.A. has not been filed by the authorized officer, that the applicant bank has not executed all the details in the statement of account, that the account has wrongly been declared as NPA by the applicant bank, that the applicant bank has charged exorbitant and excessive rate of interest and that the applicant bank has not filed the statement of account as per the RBI Guidelines. Accordingly prayed for dismissal of the O.A.

7. To prove its case, the applicant bank leads its evidence by filling the affidavit of A.W. 1 Mr. Ramer - Sharma, Chief Manager of the applies Lank who has exhibited the documents as A.W. 1/1 to A.W. 1/67 which includes power/letter of attorney as Ex. A.W. 1/1, power of attorney in favour of Mr. K.K. Dhawan, Chief Manager as Ex. A.W. 1/2, memorandum of articles of association as Ex. A.W. 1/3, sanction letter dated 19.04.2013, 20.09.2013 and 14.11.2013 as Ex. A.W. 1/4 to Ex. A.W. 1/6, borrower company dated 20.11.2013 passed by the defendant No. 1 (company) as Ex. A.W. 1/7, memorandum of property as Ex. A.W. 1/8 & Ex. A.W. 1/9, sale deed as Ex. A.W. 1/10, correction deed as Ex. A.W. 1/11, sale deed dated 23.11.2009 as Ex. A.W. 1/12, rectification deed dated 30.10.2009 as Ex. A.W. 1/13, memorandum of deposit of title deed dated 23.11.2009 as Ex. A.W. 1/14, memorandum of deposit of title deed as Ex. A.W. 1/15 & Ex. A.W. 1/16, respectively, property as Ex. A.W. 1/17, allotment letter issued by DDA as Ex. A.W. 1/18, conveyance deed as Ex. A.W. 1/19, registered sale deed as Ex. A.W. 1/20, property as Ex. A.W. 1/21, sale deed as Ex. A.W. 1/22, hypothecation agreement dated 28.11.2013 for Rs. 20/- Crores as Ex. A.W. 1/23, General term loan agreement as Ex. A.W. 1/24, letter of lien deposit as Ex. A.W. 1/25, demand promissory note as Ex. A.W. 1/26, affidavit/undertaking dated 28.11.2013 by defendant No. 1 as Ex. A.W. 1/27, irrevocable general power of attorney as Ex. A.W. 1/28, letter obtained from the directors of the defendant No. 1 company dated 28.11.2013 as Ex. A.W. 1/29, letter obtained from the directors of the defendant No. 1 company as Ex. A.W. 1/30, consent clause dated 28.11.2013 as Ex. A.W. 1/31, guarantee as Ex. A.W. 1/32, corporate guarantee as Ex. A.W. 1/33, personal guarantee as Ex. A.W. 1/34, personal guarantee as Ex. A.W. 1/35, various letters and correspondence dated as Ex. A.W. 1/36 to Ex. A.W. 1/40, 07.03.2016, 22.03.2016, 28.03.2016, 24.05.2016, 06.07.2016, 17.06.2016, 16.08.2016 as Ex. A.W. 1/41 to Ex. A.W. 1/47, 6 cheques as Ex. A.W. 1/48 to Ex. A.W. 1/53, NPA certificate as Ex. A.W. 1/54, notice dated 25.05.2016 as Ex. A.W. 1/55, under section 13 (3) and reply to the objection as Ex. A.W. 1/56 & Ex. A.W. 1/57, running statement of account of 5 Term loan account No. 41370631024016, 41370631024017, 413706310024018, 413707030003138, 413707030003139 as Ex. A.W. 1/58 to as Ex. A.W. 1/62 and the dummy ledger pertaining to the said facilities are as Ex. A.W. 1/63 to Ex. A.W. 1/67.

8. Heard and the record has been perused thoroughly. Apparently, defendants have raised pleas that the defendant No. 1 had availed a loan facility from the applicant bank and received a loan of 15 Crores for utilizing the same to help build houses to the people of North East Region and accordingly small housing finances were given to the people of North East Region including the, teachers under Sarva Siksha Abhiyan (SSA) of the Central Government living in various parts of North East Region including but not limited to the states of Manipur and Mizoram. But on perusal of records, it is observed that the defendants have admitted the facts of having availed credit facility as advanced by the applicant. It is pertinent to mention here that credit facility of Rs. 15.00 Crores as admitted the defendants has been further renewed and enhanced to the tune of Rs. 20.00 Crores. The defendant No. 1 borrower company through its directors/authorized signatory, has signed and executed various security and loaning documents in favour of applicant bank on 28.11.2013 by virtue of Board resolution dated 20.11.2013 and also secured by the defendant No. 2 to 4 by executing their personal deed of guarantees and by way of equitable mortgaged as detailed in the original application which has not been disputed by the defendants.

9. Defendants have raised objections that the after getting the loans, the same were disbursed to the small housing beneficiaries in the whole of North East Region Particularly to the salaried employees under the State and Central Governments including teachers under the SSA Scheme of Central Government for constitution, reconstruction, renovation, extension and purchase of houses. It is submitted that the defendants have not submitted the complete details of the persons to this Hon'ble Tribunal whom they have granted to loans as alleged and hence they are bound to prove the same before this Hon'ble Tribunal.

10. Defendants have raised objections that the began to suffer problems recovering loans issued to its customers including the SSA teachers and other salaried customer when their salaries were not released on time by the respective Government departments so much so that the defendant No. 1 instantly faced problems in its loan repayments process to the applicant bank and the same were promptly informed to the applicant bank time to time and the defendant No. 1 regularly asked for extension of repayment term. The defendant No. 1 also requested for a period of moratorium submitting the reason behind poor repayment of loan was purely due to poor collection/recovery of small housing/loans from their beneficiaries and also due to poor cash flown and not due to transaction done on other purpose. Defendant No. 1 are doing their level best keeping in continuous touch and putting in their best efforts with the government officials for getting funds from the Central Government under SSA scheme so that their beneficiaries can be paid salary and they in turn get their loan recoveries too. The main area of operation of housing business of defendant No. 1 is in north east region states, particularly in Manipur and Mizoram, that too for hilly/difficult terrain, where, banking operation is lacking much. For providing shelters to the needy people and due to poor collection/recovery from the loanee including SSA teachers, as a result, the company was not able to pay the due amount of installments and Interest inspite of all the best efforts by the company. Despite the above-mentioned difficulties, the applicant bank classified the account of defendant No. 1 as NPA on 31.12.2015 and thereafter the notice under section 13(2) of SARFAISI Act, 2002 was also issued on 25.05.2016. But on perusal of records, it is apparent that the defendant No. 1 company was not repaying loans regularly and in time and due to persistent default on the part of the defendants, the account of the defendant No. 1 company remained irregular and was rightly declared as NPA as per RBI Guidelines.

11. Defendants raised the objections, in order to settle the account, the defendant No. 1 approached the applicant bank and submitted an OTS proposal for an amount of Rs. 7.25 Cr. On 18.02.2017 putting request for its consideration and also requested to allow the sale of the three mortgaged properties through private sale. The defendant No. 1 also confirmed that the sale consideration from the private sale of the three-mortgaged shall be deposited with the bank and further requested the Applicant Bank to issue NOC for this very purpose. The defendant No. 1 also requested for defendant of legal action. It is pertinent to mention here that the OTS dated 18.02.2017 was not considered by the Applicant Bank. However after detailed discussions and after meeting with Regional Manager, of the applicant bank on 16.03.2017 and his assurance, the defendant No. 1 submitted a enhanced OTS proposal for an amount of Rs. 8.25 Crores on 17.03.2017, wherein the defendant No. 1 again request for its consideration also again requested to allow the sale of the three mortgaged properties through private sale. The defendant No. 1 also again confirmed that the sale consideration forms the private sale of the three mortgaged shall be deposited with the bank and further requested the applicant bank to issue NOC for this very purpose. The defendant No. 1 again requested for defendant of legal action. The said enhanced OTS proposal is still lying under consideration with the applicant bank. It may be submitted that despite the repeated request and enhanced proposal by the defendant No. 1 the applicant bank has not responded any communication so far till date and instead approached this tribunal against the defendant No. 1. It is further submitted that the applicant bank has neither accepted the OTS proposal nor rejected the same. In furtherance of the said OTS proposal, the defendant No. 1 deposited even after the declaration of the said account NPA by the applicant bank. The defendant No. 1 is in process of making arrangements to deposit the remaining amount and incase defendant No. 1 fails to make arrangements to deposit the remaining amount, the same shall be paid by selling the mortgaged property with the consent of the bank. On the perusal of records, it is apparent that the applicant bank cannot settle the account with the defendants against the policy of the bank and the defendants have no right to force to do the same and as such the applicant bank was not considered the OTS proposal as allegedly submitted by the defendants. The defendants have misused the credit facility as advanced by the applicant bank and hence the defendants cannot take any benefit of their own wrongs. The applicant bank has declared the account of the defendant No. 1 company as NPA as per RBI guidelines.

12. Defendants have raised objections that the sudden declaration in respect of demonetization of the currency, the entire economy came to a halt and all the process suddenly came to a standstill. Demonetization also very badly affected the efforts of the defendant No. 1 in settling the loan account. Heard and the record has been perused thoroughly. The defendants have raised plea that due to demonetization of currency by the Govt., business of the defendants was badly affected and the defendants could not make regular payment of the loan amount and the defendants could not adhere to the schedule of payment of the loan amount. However, it is observed that, the reason given by the defendants for non-payment of the loan amount holds no ground in the eyes of law. Further, it is also submitted that these policies have been implemented by the government over which the applicant bank has no control and the defendant cannot take the shield of these government policies to not repay the loan amount which has now been outstanding since 2017. Further, the defendants have not placed on record any documentary evidence to prove its allegation. So far as non-payment by government towards SSA, is not a ground not to repay the loan, as it is the responsibility of the defendant to maintain its activities in such a manner that the business activities and repayment remained balanced and for that simple reason the defendant cannot escape from its liability. Thus, the said objection is not maintainable and hence rejected.

13. The defendants have raised the objection that the present O.A. is not filed by the authorized officer, but on perusal of the it is observed that the present O.A. has been filed by Mr. Rameshwar Sharma, Chief Manager of the bank, whose power of attorney executed by the applicant bank in his favour is Ex. A.W. 1/1. Therefore, the plea is not maintainable and the same is rejected.

14. The defendants have raised objection that the accounts of the defendants have wrongly declared NPA but this Tribunal is of the view that statement of account is duly certified under Section 4 of the Bankers Book Evidence Act, and the same cannot be challenged unless specific entry is pointed out by the defendants. Hence, the said objection is not maintainable is same is rejected.

15. Th

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e witness has fully corroborated the averments made in the O.A. Even otherwise the whole case of the applicant bank is based on the documents and the witness has duly proved all these documents. The evidence filed by the applicant bank gone un-rebutted and there is no question of disbelieving the evidence lead by the applicant bank and applicant bank has proved its case beyond reasonable doubts. Accordingly, the bank is entitled to recover the entire amount alongwith pendente lite interest and future costs as agreed between the parties. I hereby allow this O.A. as the applicant bank has proved its claim beyond any doubt. Resultantly, in the light of the above discussions, the Original Application deserves to be allowed. ORDER (i). Consequently, I allow this O.A. and direct the defendants No. 1 to 4 to pay to the applicant bank jointly or severally, within a period of 30 days, a sum of Rs. 16,57,95,098/- (Rupees Sixteen Crores Fifty-Seven Lakhs Ninety-Five Thousand and Ninety-Eight Only) being principal sum interest calculated on the basis of contractual rate of interest under aforesaid credit/term loan facilities together with pendente lite and future interest @ 13.25% with monthly rests till its realization, failing which the aforesaid amount shall be recovered from the sale of the mortgage properties i.e. 1) Extension of Three Storey Building on Khata No. 407, being Khasra No. 25 Kha Min (0.0327 Hectares) and Khasra No. 25 Kh Min (0.0267 Hectares and Khata No. 236 Khasra No. 25 Kha Min (0.0149 Hectares) Total 743 Sq. Meters Kishanpur-V Dehradun, 2) Extension of Ground Floor DDA Flat No. 28/KG-III, Janta, Vikaspuri, New Delhi and 3) Extension of Entire First and Second Floor, DDA Flat No. 28/KG-III, Janta Vikaspuri, New Delhi and in case of default the same shall be recovered from the sale of the movable and immovable assets/properties of the defendants No. 1 to 4. (ii). The recovery certificate be issued forthwith and be sent to the Recovery Officer-II, Debts Recovery Tribunal-III, Delhi. (iii). Parties are directed to appear before the Recovery Officer-II, DRT-III, Delhi on 25.03.2020. (iv). Copies of final order be sent to all concerned free of cost. File be consigned to records.
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