- Bookmark
- Share
- CaseIQ
PUNJAB NATIONAL BANK v. SMT NEELAM GUPTA
Structured Summary of the Judgment
Factual and Procedural Background
This judgment was delivered by the Debts Recovery Tribunal, Lucknow (Presiding Officer A.H. Khan) in Original Application No.378 of 2021, dated 29.03.2022. The applicant is Punjab National Bank. Defendant Nos.1 & 2 (Smt. Neelam Gupta and Shri Sanjeev Gupta) were borrowers and Defendant No.3 (Shri Rajiv Kumar) was a guarantor in his personal capacity.
The bank claimed recovery of Rs.71,19,373/- (Rupees Seventy One Lacs, Nineteen Thousand, Three Hundred Seventy Three Only), broken down as: Rs.54,77,173/- (Housing Loan Account-I), Rs.6,57,649/- (Housing Loan Account-II) and Rs.9,84,550/- (OD Loan Account), together with pendentelite and future interest, costs and other reliefs. The loans and security documents were executed in 2013 (sanction letters dated 13.05.2013, 09.07.2013 and 26.08.2013; various agreements and continuities and guarantee agreements are exhibited in the file).
The borrowers created a mortgage by depositing title deeds in favour of the bank over Flat No. A-22-A, Second Floor, Gagan Enclave, Ghaziabad (registered with Sub Registrar Office-I, Ghaziabad). The loan accounts were classified as NPA on 31.03.2016. The bank issued a Demand Notice dated 18.02.2020 under Section 13(2) of the SARFAESI Act, 2002. Summons were served by publication; defendants did not appear and the matter proceeded ex parte.
Legal Issues Presented
- Whether the applicant bank is entitled to recover the outstanding dues of Rs.71,19,373/- from the defendants based on the loan documents, securities and bank records produced.
- Whether the bank is entitled to pendente-lite and future interest and, if so, at what rate and from what date.
- What remedies are available to the bank for realization of the debt (including sale of mortgage property, adjustment of amounts recovered, and attachment/sale of personal movable and immovable assets).
- What is the extent of liability of the guarantor (defendant No.3) under the executed guarantee agreement.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Central Bank of India vs. Ravindra and others, AIR 2001 SC 3095 | Support for awarding pendente-lite and future interest by the Tribunal/Court (analogy to Section 34 CPC was referenced in context of Section 19(2) RDB Act). | The Tribunal relied on this Supreme Court authority to justify granting pendente-lite and future interest at the rate fixed by the Tribunal (the court awarded interest at 10.00% per annum with monthly rest from date of filing of the O.A.). |
Court's Reasoning and Analysis
The Tribunal's analysis proceeded in a stepwise factual and legal manner based on the material on record:
- The Tribunal found, on the affidavit evidence and documentary exhibits produced by the bank (including sanction letters, loan and guarantee agreements, mortgage/registration documents, balance confirmations and statements of accounts), that the defendants had availed the credit facilities and had executed the necessary loan/security documents in favour of the bank.
- The bank's books of account were maintained in the ordinary course of banking business and showed disbursal of loan amounts and regular crediting of payments. The Tribunal noted that the bank had charged interest from time to time and that those entries are relevant under section 4 of the Bankers' Books of Evidence Act.
- The loan accounts were classified as Non-Performing Assets on 31.03.2016. The bank issued a Demand Notice under Section 13(2) of the SARFAESI Act dated 18.02.2020; the defendants did not respond to demands and remained liable.
- Summons being served by publication and the defendants' non-appearance resulted in an ex parte proceeding. The bank filed an affidavit of its Chief Manager in support of the claim.
- On the basis of these documentary and affidavit materials, the Tribunal concluded that the bank's claim was established and within limitation. Consequently, the defendants were held jointly and severally liable for repayment of the outstanding amounts shown in the bank's records.
- As to interest, the Tribunal observed that Section 19(2) of the Recovery of Debts and Bankruptcy Act, 1993 (analogous to Section 34 CPC) permits the Tribunal to award pendente-lite and future interest. The Tribunal relied on the cited Supreme Court precedent (Central Bank of India v. Ravindra & Ors.) to support awarding such interest, and considered that interest at the rate of 10.00% per annum with monthly rest on reducing balance from the date of filing of the O.A. would meet the ends of justice.
- Based on the proofs of loan, mortgage and guarantee, the Tribunal determined the scope of remedies: issuance of a Recovery Certificate, sale of the mortgage property (if not already sold under SARFAESI), adjustment of any amounts realized, and, if dues remain, attachment and sale of defendants' personal movable and immovable property. The Tribunal also restrained the defendants from depleting or dealing with their properties without first paying the bank's claim.
Holding and Implications
Holding:
Original Application No.378 of 2021 is allowed ex parte against defendant Nos.1 to 3. The Tribunal directed issuance of a Recovery Certificate for Rs.71,19,373/- (with the internal breakdown as recorded in the judgment) together with interest at the rate of 10.00% per annum with monthly rest from the date of filing of the Original Application until full realization. Costs were awarded in favour of the applicant bank. The Tribunal also ordered the usual consequential reliefs for realization of the debt (sale of mortgage property, adjustment of amounts realized, and attachment and sale of other assets if required).
Specific consequences and operative points recorded in the judgment:
- The defendants are jointly and severally liable to pay the bank's dues. They were directed to pay the balance within two months from the date of judgment; failing which the bank is entitled to sell the defendants' personal movable and immovable assets and the mortgage property (if not already sold under SARFAESI).
- Liability of Defendant No.3 (guarantor) is expressly limited to the extent of the Housing Loan facility amounting to Rs.54,77,173/- as per the executed guarantee agreement.
- Any amount recovered from sale of mortgage property/hypothecated assets or otherwise shall be adjusted towards the debt and only the balance shall be recoverable; if dues still remain unsatisfied, recovery shall be by attachment and sale of the defendants' movable and immovable assets, jointly and severally.
- The defendants are restrained by injunction from depleting, transferring, encumbering, alienating or otherwise dealing with their properties without first satisfying the bank's claim.
- The Tribunal ordered that the Recovery Certificate be issued immediately under Section 19(22) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, by fixing 30.06.2022 before the R.O., DRT Lucknow. The applicant bank was directed to file a memo of costs for preparing the Recovery Certificate.
Implications:
- Direct effect: the bank obtains an enforceable Recovery Certificate for the debt and interest; the defendants face immediate enforcement remedies including sale of the secured property and attachment of assets. The guarantor's liability is limited as recorded above.
- No indication in the text that the Tribunal intended to lay down any novel legal principle or to set a new precedent beyond applying established authorities (the Tribunal expressly relied on a Supreme Court decision to justify awarding pendente-lite and future interest).
Order date: Judgment pronounced in open court on 29.03.2022.
IN THE DEBTS RECOVERY TRIBUNAL AT LUCKNOW
Present: A.H. Khan, Presiding Oflicer Case No. Original Application No.378 of 2021 Dated:29.03.2022 Punjab National Bank, a body cotporate constituted under the Banking Companies (Acquisition and Transfer of Undertaking) Act 1970, having its @ffice at Plot No.4, Sector-l0, Dwarka, New Delhi-I10075 and a Branch at G.T Road, Ghaziabad, UP.
.Applicant Bank Versus l. Smt. Neelam Gupta, Wo Shri Sanjeev Gupta, R/o Flat No.A-22-A, Second Floor Gagan Enclave Ghaziabad, UP. 2'd Address: B-49, Daulatpura-2, Rahul Vihar,
Tehsil, Ghaziabad, UP. Shd Shd Sanjeev Gupta, R"/o Flat No.A-22-A,
Second Floor Gagan Enclave Ghaziabad, UP.
2nd Address: B-49, Daulatpura-2, Rahul Vihar,
Tehsil, Ghaziabad, [IP.
Shri Rajiv Kumar, S/o Shri Jai Prakash Gupta, R/o House No.387, Block, AG Shalimar Bagh, New Delhi-l10088. 2nd Address: R/o Flat No.A-22A, Second Floor, Gagan Enclave, Ghaziabad, UP.
.Defendants
Counsel for the applicant-Bank : Mr.
Advocate. Counsel forthe defendants : None.
1
2
O.A. No.378 of 2021 JUDGMENT 1. This Original Application has been filed by the applicant Bank under Section 19 of the Recovery of Debts & Bankruptcy Act, 1993, against defendants for the recovery of Rs.71,19,373l- (Rupees Seventy One Lacs, Nineteen Thousand, Three Hundred Seventy Three Only) (Rs.54,77,173/- in Housing Loan Account-l), (Rs.6,57,6491- in Housing
Loan Account-Il) and (Rs.9,84,550/- in OD Loan Account) together with
pendentelite and future interest, costs and other reliefs etc. 2. The brief facts of the case are that the defendant Nos.l & 2 are borrowers and the defendant No.3 is guarantor in his personal capacity. The defendants vide their loan application dated 04.04.2013 approached the bank for grant of Housing Loan facility of Rs.36.50/- lacs, which were duly considered and sanctioned by the bank vide its sanction letter dated 13.05.2013 on certain terms and conditions (Exhibit No.A-2 &
Exhibit No.A-3) to this original application). 3. To secure the aforesaid Housing Loan Facility of Rs.36.50/- lacs, the defendant Nos.1 & 2 had executed and signed Agreement of Housing
Loan & Affidavit Cum Undertaking in favour of the bank on 13.05'2013. The defendant No.3 being guarantor towards the credit facility had also executed and signed Guarantee Agreement in favour of the applicant- bank, acknowledging therein his liability same and equal with the principal borrower (Exhibit No.A-4 to Exhibit No.A-6) to this original application). 4. In order to secure the repayment ofbank dues, the defendant No.l /- ) / created mortgage of immovable property i'e. House/Plot/Flat situated at ,/
,,/
O.A. No.378 of 2021Flat No.A-22-A. Second Floor. Gagan Enclave Ghaziabad. UP admeasurins 112. 67 sq mtr. in favour of the applicant-bank by depositing of title deed of the property, which was duly registered with
Sub Registrar Office-I, Ghaziabad (Exhibit No.A-7 to Exhibit No.A-9) to
this original application). 5. The defendant Nos.l & 2 again approached the bank for grant of
fresh Housing Loan limit of Rs.5.50/- lacs, which was also sanctioned by the bank vide its sanction letter dated 09.07.2013 on certain terms and conditions, for which the defendant No.1 executed and signed Letter of Continuity dated26.11.2013 in favour of the bank (Exhibit No.A-10) to
this original application. 6. The defendant Nos.l & 2 again approached the bank for grant of
ODHL limit of Rs.6.00/- lacs, which was also sanctioned by the bank vide its sanction letter dated 26.082013 on certain terms and conditions, for which the defendant No.l had again executed and signed Letter of Continuity dated 26.08.2013 in favour of the bank (Exhibit No.A-l1 &
Exhibit No.A-12) to this original application. 7. The defendants had also executed and singe Balance and Security Confirmation Letter dated 01.12.2015, 04.04.2017 & 31.03.2020 in favour of the bank (Exhibit No.A-13) to this original application. 8. For availing the aforesaid credit facilities, the applicant Bank had opened three loan accounts in the names of defendant No.l in order to maintain the account of the said loan facilities. 9. After availing the aforesaid credit facilities, the defendants failed to maintain financial discipline and also failed to comply with the terms
a and conditions, consequently, the loan accounts of the defendant ,/
.,/ .\ ,/
3
4
O.A. No.378 of202l No.l were classified as NPA on 31.03.2016 by the bank as per RBI guidelines, therefore, the applicant-bank issued Demand Notice dated 18.02.2020 under Section t3(2) of the SARFAESI Act 2002 (Exhibit No.A-14) to this Original Application) to the defendants requesting them to make payment, but the defendants did not considered the same and the and the loan accounts ofthe defendant No.l are still un-liquidated, hence, this Original Application has been instituted. 10. As per books of the bank maintained in the usual and ordinary course of banking business, an outstanding of Rs.71,19,373l- (Rupees Seventy One Lacs, Nineteen Thousand, Three Hundred Seventy Three Only) (Rs.54,77,1731- in Housing Loan Account-I), (Rs.6,57,6491- in Housing Loan Account-Il) and (Rs.9,84,550/- in OD Loan Account)
including interest upto 3 I .03.2016 were lying due for payment, for which
the defendants are jointly and severally liable to repay the same, which they did not pay despite repeated requests and demands. The applicant Bank has filed the copy of Statement of Accounts (Exhibit No.A-15 to Exhibit No.A-16) to this original application.
I l. The cause of action for filing the present application arose firstly
when the aforesaid credit facilities were sanctioned by the applicant Bank
and the same were availed by defendants and necessary documents were
executed. The cause of action further arose again on 18.02.2002 when the applicant bank had issued Demand Notice was sent to the defendants recalling the entire outstanding dues and they failed to pay the same. 12. Summon were served upon the defendants through paper t / / publication, by the defendants did not appeared before this T ^ ri " b " un * a * l ^ to * I t ,.^ I
O.A. No.378 of202l contest the case, hence, the matter proceeded ex-parte against the defendants. 13. In support of the case, Shri Devendra Singh Panwar, Chief Manager of the applicant Bank has filed their affidavit (As per this original application). 14. On a careful scrutiny of the evidence on affidavit to this original application), it is proved that defendants had availed various Credit facilities from the applicant bank by executing loan and security documents detailed as above in favour of the applicant-Bank. A perusal of the application, evidence and documents relied upon clearly show that
defendants had utilized the credit facilities as granted to them. Theapplicant-bank had maintained the Books of accounts in the ordinary
course of banking business showing disbursal of the loan amount' It
further shows that bank had regularly credited the amount paid by thedefendants in the books of accounts. The Bank had also charged interest from time to time and the entries are relevant u/s 4 of the Bankers Books of Evidence Act. It is also proved that the applicant bank's claim is within limitation against the defendants. Therefore, the defendants are jointly and severally liable to pay the dues. 15. Accordingly, the defendants are directed to pay the balance dues to the applicant bank within a period of 2 months from the date ofjudgment failing which the applicant bank will be entitled to sell the personal
assets/properties of defendants. 16. The applicant-bank has claimed interest @1025% per annum in
loan accounts together with pendent-lite and future interest per annum in Loan Account till the date of its realization and costs. The contest
./ "..,
,/
5
6
O.A. No.378 of202l between the applicant-bank and the defendants comes to an end and after filing of the O.A. as per the provisions of Section l9(2) of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time) which is analogous to Section 34 to the CPC, the Tribunal/Court has direction in awarding pendet-lite and future interest. I am also supported in my vide by Hon'ble Supreme Court in a case titled Central Bank of India vs. Ravindra and others reported in AIR 2001 SC page 3095. On the basis of the foregoing discussion, interest ofjustice will be served if pendeteJite and future interest is granted @10.00% per annum in the Loan Accounts interest with monthly rate on reducing balance from the
date of filing of the O.A. till the date of realization with costs' 17. In the result, the Original Application succeeds exparte against the defendants, with costs. The bank has proved the loan execution of loan
documents and creation of mortgage in favour of the bank. The liabilities ofthe defendants arejoint and several and mortgage property as well as the personal properfy/properties ofthe defendants is liable to be sold. 18. It is, therefore, ordered:- (i) That the Original Application No.378 of 2021 of the applicant bank for issuance of Recovery Certificate to the tune of Rs.71,19,373l- (Rupees Seventy One Lacs, Nineteen Thousand, Three Hundred Seventy Three Only) (Rs.54,7 7,17 3/- in Housing Loan Account-I), (Rs'6,57'649l- in Housing Loan Account-Il) and (Rs.9,84,550/- in OD Loan Account) together with interest @10-00% per annum with monthly rest from the date of filing of the Original 4
Application i.e. 29.06-2021 till the loan is fully liquidated andr'
o/'
7
O.A. No.378 of 2021costs succeeds and is hereby allowed expa.rte against defendant Nos.l to 3 jointly and severally. (ii) It is pertinent to mention here that the liability of the defendant No.3 is only to the extent of Housing loan facility amounting to Rs.54,77,173l- as per the execution of guarantee agreement in favour ofthe bank. (iiD The defendants are directed to pay the dues within a period of two months from the date of judgment, failing which the applicant bank will be entitled to recover the same from the
personal movables and immovable assets of the defendants. (iv) The applicant-Bank is entitled to recover aforesaid amount by the sale of mortgage property (If not sold earlier under the provisions of the S.A.R.F.A.E.S.I. Act,2002) the, amount, if
8
O.A. No.378 of202l ("i) Let Recovery Certificate be issued immediately :uls 19(22) of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 by fixing 30.06.2022, before R.O., DRT, Lucknow. 19. The applicant bank is directed to file a memo of cost for preparing Recovery Certificate uls 19(22) of the Recovery of Debts & Bankruptcy Act, 1993.
Judgment is pronounced in the open court. Dated:29.03.2022
Khan)
Alert