STATE BANK OF INDIA v. M/S SIMMTRONICS SEMICONDUCTORS LTD

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 for recovery of US Dollars 3,761,519.11 = Rs.23,91,19,581.75 (Rupees twenty three crores ninety one lacs nineteen thousand eight hundred eighty one and paisa seventy five only) alongwith pendente lite and future interest @ 4.85% per annum with monthly rests, till realization from defendants jointly and severally.

2. Succinctly, the case of the applicant bank, as seen from the averments made in the O.A., is as follows:

The applicant bank is a body corporate constituted under the State Bank of India Act, 1955 and has filed the present O.A. through its Vice President (Credit & Syndication), Dubai International Financial Centre, Dubai, UAE, being fully conversant with the facts of the present case. Defendant No.1 M/s Simmtronics Semiconductors Limited FZE, a Company incorporated in the Dubai Airport Free Zone with the Commercial Trading License No.1642 (hereinafter referred to as the Borrower Company) is a step down subsidiary of defendant no.1, Upon the representations of the defendants, the applicant bank, vide Sanction Letter dated August 28, 2013, had sanctioned fund and non-fund based facilities to the Borrower Company, as under:

Vide its Resolution dated 5^thSeptember, 2013 defendant no.1

Company had agreed to stand as a guarantor for the aforesaid loan

and authorized Mr.Indrajit Sabharwal / defendant no.2 to execute

corporate guarantee and to affix its common seal in the presence of

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Ms.Bhavna Sabharwal / defendant no.3 and in furtherance thereof, the defendants executed Facility Agreement dated September 10, 2013 in favour of the applicant bank. A Corporate Guarantee Deed was also executed by defendant no.1 as per Resolution dated September 05, 2013. Besides that defendants no.2 & 3 also furnished their guarantee for the entire loan amounting to 10 million US Dollars. However, on the representations and guarantee of defendants no.1 & 3, the aforesaid credit facilities were reduced from 10 million US Dollars to 8 million US Dollars vide letter dated 23^rd January, 2014 and after necessary documentation, the borrower Company duly availed and utilized the said loan granted by the applicant bank starting from September 24, 2013 and the applicant bank opened various accounts in its books in the name of the borrower Company for carrying on the loan transactions. It is further pleaded that acting on behalf of the borrower Company, on 24^th March, 2014 defendant no.2 had also acknowledged and confirmed the balance outstanding as on 28^thFebruary, 2014 as under:

The applicant bank further submits that the amount of letter credit

facility developed on different dates from time to time was paid to the beneficiary by the applicant bank and the details of the same are

given in Para 5(P) of the present O.A. It is further the case of the

applicant bank that thereafter the account of the borrower became

irregular and the interest was not serviced and due to continuation of

irregularity in the account, the same was classified as NPA on 31^st

March, 2014 as per RBI Guidelines of RBI and vide Legal Notice

dated 26^thMarch, 2014, the applicant bank called upon the borrowers

to pay the outstanding amount of USD 4,487,429.00 to it within a

period of seven days from the receipt of the said notice and in reply

thereto, the borrower promised to regularize the account, but nothing

was actually done and even the cheque for an amount of USD 10

million issued by the borrower on 10^thJune, 2014 was bounced and

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appropriate criminal proceedings were sought to taken in the court of competent jurisdiction. The applicant bank further submits that vide its letter dated 23^rdJuly, 2014 the applicant bank duly invoked the corporate guarantee / personal guarantee and called upon defendants no.1 & 3 to settle the entire dues, but none was done by the defendants and no repayment was made till date and as per the books of accounts maintained by it, USD 3,761,519.11 = Rs.23,91,19,581.75 was due and payable by defendants no.1 to 3, jointly and severally, to the applicant bank together with pendente-lite and future interest @ 4.85% per annum with monthly rests till realization. Hence, by filing the present O.A., the applicant bank has prayed for issuing Recovery Certificate for recovery of the said O.A. amount alongwith future interest at the rate stipulated above against the defendants jointly and severally.

3. Notices were issued to the defendants, but they did not appear despite service and, as such, they were proceeded ex-parte, vide order dated 10^thSeptember, 2015. Subsequently, defendant no.1 filed an application bearing I.A. No.237 of 2016 for setting aside ex- parte order against it. The said application was allowed and ex-parte proceedings against defendant no.1 were set aside and defendant no.1 Company filed its Written Statement resisting the claim of the applicant bank. It has been contended that the answering defendant no.1 Company suffered losses due to the various omissions and commissions which are directly attributable to the applicant bank and its erring officials. It is further contended that the documents on which the applicant bank is relying upon are false, fabricated and manufactured and in any event the same are full of interpolations and gross material alterations due to filling up the words, figures and amounts in the handwriting or otherwise after the signatures were got appended. The answering defendant no.1 Company further contends that the applicant bank had obtained various documents, including sets of unfilled and undated printed proformas, blank letter heads, blank stamp papers and even unfilled and undated printed proformas. It is further contended that the applicant bank is guilty of charging

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penal interest and capitalizing the same. According to defendant no.1, the claim of the applicant bank is highly exaggerated and is totally denied. While giving para-wise reply, the answering defendant no.1 Company has denied the case of the applicant bank in its entirety and has prayed for dismissal of the present O.A. with costs.

4. To substantiate its case, the applicant bank has filed evidence affidavits of AW-1 Mr.Ashwani Kumar Singh, its Vice President, AW-2 Mr.Dinesh Kumar Singh Purohit, its Deputy General Manager and AW-3 Ms.Pushpa Ranjan, its S.O. and has also exhibited documents as Exs.AW-1/2 to AW-1/5, AW-1/7 to AW-1/21, AW-2/2 to AW-2/5 and AW-3/1 and has also marked documents as Mark AW-1/22, AW- 1/23, AW-2/1, AW-2/7 to AW-2/12, AW-2/23, AW-2/26, AW-2/28 to AW-2/32. On the other hand, the only contesting defendant no.1 has not filed any evidence, either oral or documentary, despite availing several opportunities including the last chances granted on 1^st November, 2018 and 22^ndDecember, 2018 with a specific order that in case of default, its right to file evidence shall stand closed automatically.

5. I have heard the counsel for the parties and have gone through entire material on record.

6. Now the point for consideration is whether the applicant bank is entitled to recover an amount of Rs.23,91,19,581.75 (Rupees twenty three crores ninety one lacs nineteen thousand eight hundred eighty one and paisa seventy five only) alongwith pendente lite and future interest @ 4.85% per annum with monthly rests, till realization from defendants jointly and severally. under Section 19 of the RDDBFI Act, as prayed for?

7. In order to prove its case, the applicant bank has examined AW-1 Mr.Ashwani Kumar Singh, its Vice President, AW-2 Mr.Dinesh Kumar Singh Purohit, its Deputy General Manager and AW-3 Ms.Pushpa Ranjan, its S.O. who have also exhibited documents Exs.AW-1/2 to AW-1/5, AW-1/7 to AW-1/21, AW-2/2 to AW-2/5 and

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AW-3/1 and also marked documents as Mark AW-1/22, AW-1/23, AW-2/1, AW-2/7 to AW-2/12, AW-2/23, AW-2/26, AW-2/28 to AW- 2/32. From the clear and categorical depositions of AW-1 Mr.Ashwini Kumar Singh, Vice President of the applicant bank at Dubai International Finance Centre, Dubai and AW-2 Mr.Dinesh Kumar Singh Purohit, Deputy General Manager of the applicant bank as well as from the documents exhibited and marked by them, it stands fully established that the applicant bank is a body corporate constituted under the State Bank of India Act, 1955 whereas the Borrower Company is a step down subsidiary of defendant no.1 and upon the representations of the defendants, the applicant bank, vide Sanction Letter dated August 28, 2013, had sanctioned fund and non- fund based facilities to the tune of 10 million USD to the Borrower Company which authorized Mr.Indrajit Sabharwal / defendant no.2 to execute the requisite documents and affix its common seal thereon in the presence of Ms.Bhavna Sabharwal / defendant no.3. They have further proved that a Corporate Guarantee Deed was also executed by defendant no.1 consequence of Resolution dated September 05, 2013 passed by it and further that defendants no.2 & 3 also furnished their guarantee for the entire loan amounting to 10 million US Dollars. It also stands established that on the representations and guarantee of defendants no.1 & 3, the aforesaid credit facilities were reduced from 10 million US Dollars to 8 million US Dollars vide letter dated 23^rdJanuary, 2014 and after necessary documentation, the borrower Company duly availed and utilized the said loan granted by the applicant bank starting from September 24, 2013 and the applicant bank opened various accounts in its books in the name of the borrower Company for carrying on the loan transactions. It is further pleaded that acting on behalf of the borrower Company, on 24^th March, 2014 defendant no.2 had also acknowledged and confirmed the balance outstanding as on 28^thFebruary, 2014. It also stands established from the cogent and consistent statements of the said witnesses that the amount of letter credit facility developed on different dates from time to time was paid to the beneficiary by the applicant bank and further that thereafter the account of the borrower

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became irregular and the interest was not serviced and due to continuation of irregularity in the account, the same was classified as NPA on 31^stMarch, 2014 as per RBI Guidelines of RBI and vide Legal Notice dated 26^thMarch, 2014, the applicant bank called upon the borrowers to pay the outstanding amount of USD 4,487,429.00 to it within a period of seven days from the receipt of the said notice and in reply thereto, the borrower promised to regularize the account, but nothing was actually done and even the cheque for an amount of USD 10 million issued by the borrower on 10^thJune, 2014 was bounced and appropriate criminal proceedings were sought to taken in the court of competent jurisdiction and further that vide its letter dated 23^rdJuly, 2014 the applicant bank duly invoked the corporate guarantee / personal guarantee and called upon defendants no.1 & 3 to settle the entire dues, but nothing was done by the defendants and no repayment was made till date and as per the books of accounts maintained by it, USD 3,761,519.11 = Rs.23,91,19,581.75 was due and payable by defendants no.1 to 3, jointly and severally, to the applicant bank together with pendente-lite and future interest @ 4.85% per annum with monthly rests till realization.

8. As against the above discussed evidence led by the applicant bank, though defendant no.1 has filed its Written Statement resisting the claim of the applicant bank, but has not filed any evidence, either oral or documentary, despite availing several opportunities including the last chances granted on 1^stNovember, 2018 and 22^ndDecember, 2018 with a specific order that in case of default, its right to file evidence shall stand closed automatically. Thus, the evidence led by the applicant bank has gone unchallenged and un-rebutted and the defences raised by defendant no.1 remain unsubstantiated. More so, the case of the applicant bank is based on the documents executed by defendants in favour of the applicant bank during the course of banking business and there is nothing to disbelieve the same. Hence, the case of the applicant stands fully established and the applicant bank is entitled to the Recovery Certificate as prayed for. It is also relevant to mention here that defendants no.2 & 3, who stood

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as guarantors for the borrower Company by executing their personal Deeds of Guarantee in favour of the applicant bank and undertook to pay the outstanding dues in the account of defendant no.1 Company, have remained ex-parte and have not come to contest the claim of the applicant bank.

9. In the result -

(i) The OA is allowed with costs. The applicant bank is held entitled to recover a sum of

Rs.23,91,19,581.75 (Rupees twenty three crores ninety one lacs nineteen thousand eight hundred eighty one and paisa seventy five only) alongwith pendente lite and future interest @ 4.85% per annum simple till realization from defendants jointly and severally. The defendants are directed to pay the aforesaid decretal amount alongwith future interest to the applicant bank within sixty days from today failing which the same shall be recovered from their personal movable and immovable properties jointly and / or severally. The order dated 6^thMay, 2015 passed by this Tribunal restraining the defendants from alienating or creating any sort of encumbrance in respect of their immovable and movable properties is made absolute.

(ii) The applicant bank is directed to file the revised statement of account before the Recovery Officer, DRT-II, Delhi.

(iii) The Recovery Certificate be issued forthwith and be sent to Recovery Officer, Debts Recovery Tribunal- II, Delhi.

(iv) The Registry of this Tribunal is hereby directed to issue free copy of this order and send to the both parties.

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(v) Parties are directed to appear before learned Recovery Officer, DRT-II, Delhi on 20^th September,

2019.

(vi) File be consigned to the records.

(G.V.K. Raju)

PRESIDING OFFICER

DRT-II, DELHI (Pronounced in Open Court) Dated: 17^th July, 2019.

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