ORDER
1. All the complainants are family members of Ghaisas family. Ghaisas family has a limited company named M/s Mint Bio Fuels Ltd. It has office at Pune. In the year 2007 at the behest of Bank of Maharashtra, the company accepted NABARD as consortium partner. The said company was sanctioned loan limits to the extent of Rs. 17 crores by Bank of Maharashtra, Opposite party no. 1 and NABARD. In April, 2009, due to non acceptance of bio diesel manufactured from PFAD in European countries, the company was compelled to introduce raw materials like Soy acid oils and other oil derivatives in place of refined and distilled raw materials alongwith certain additions in the plant to make it compatible with the raw material.
2. In the month of June, 2010, the company account was marked as NPA for technical reason i.e. documentation delay on the part of the Bank by the auditors of the Opponent Bank. However, in January, 2010 Trial Run Production started in the plant. In February, 2011, the complainants approached the opponent bank to restructure the repayment schedule based on the projections of the new value added products and allow Ballooning Mode. In March, 2011, the complainants were informed to make additional payments which were to become due by June, 2011 to restore the account to standard category and the opponent bank would be inclined to change regular installments into ballooning installments. The complainants infused huge amounts in the account of company in July, 2011 subsequent to which the account was restored to performing category subsequent to which the complainants approached the Regional Manager on whose behest the complainants consented to a CDR approach and requested for (a) reduction in interest rate,(b) Moratorium for both principal and interest and (c)working capital, which were according to the guidelines in CDR application format. 3. On 07.11.2011, the opponent bank insisted upon getting the existing facilities restructured under
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CDR mechanism. Consortium meeting held wherein the lenders stated that they were not prepared to undertake any additional exposure and the company had to fend for itself. It was also indicated that the reduction in the rate of interest was not acceptable 4. On 21.11.2011, the complainants wrote a letter to opponent bank requesting to fill the gap in case NABARD is not willing to pitch in for their share for their additional exposure. It was also stated that the complainants had not only paid Rs. 594.57 lakhs to both the institutions but then they had also infused Rs. 499.70 lakhs as capital. 5. On 24.12.2011, meeting was held and certain issues were discussed. On 13.01.2012, the company was informed that financial restructuring proposal was sanctioned by higher authorities subject to following conditions:- (a) Reduction in the rate of interest was not acceptable to the lenders. (b) Agricultural land given as collateral security was to be converted in non-agricultural land and it should be taken over/purchased by the company to increase the contribution of the complainants. (c) repayment of interest during moratorium was to be made as on 31.09.2012, 30.06.2013 and 31.12.2013 respectively as per proportion given. 6. On 14.01.2012, the company informed the lenders that these terms were not acceptable 7. On 11.02.2012, company submitted to CDR Cell that while submitting the final report on CDR Cell, the Bank has deviated from the terms accepted earlier at the time of submitting the flash report on 26.09.2011 in which the terms mentioned were reluctantly accepted as they were not matching with requirements of the company and NABARD has not yet confirmed their consent. 8. On 16.03.2012, meeting of CDR Empowered Group was held where in the opponent bank was agreeable but NABARD was not. The Chairman, CDR Empowered Group observed that the opponent bank and NABARD, the only lenders were unable to arrive at a consensus about restructuring package and advised both lenders to revisit the restructuring package and revert with a consensus at next meeting. 9. On 27.03.2012, NABARD informed the opponent bank that CDR package was not approved by competent authority at their end and the opponent bank was requested to suggest future course of action to be initiated. None the less, the company paid another Rs. 71.75 lakhs together to both institutions on 29.03.2012. Vide letter dated 07.04.2012, company requested the lenders to reconsider its decision. 10. On 23.04.2012, NABARD wrote back to the company stating that the points submitted were discussed and the company was asked to confirm (1) payment of dues (interest+principal) upto March, 2012 in 6 months starting from the month next to CDR package approval, (2) interest payment in ballooning mode during moratorium period and (3) repayment of principal in 84 months starting from January, 2015. 11. On 24.04.2012, the opponent bank wrote to the company that the bank never agreed to consider working capital limited alone and working capital if any will have to be shared in consortium in existing sharing pattern. It was categorically told that there will be no stand alone financing. Consortium meeting was held on 26.04.2012. 12. On 04.05.2012, the company wrote to the opponent bank in their advice and suggestions on the offer that some amount be kept in the No Lien Account subject to acceptance of CDR package. It was also submitted that interest on outstanding debts from April, 2012 to June, 2013 will be paid fully in ballooning manner from October, 2012 to June, 2013 and repayment of principal amount will commence from January, 2014. 13. NABARD sent a letter to the Chairman, CDR, EG wherein it was stated that NABARD has conveyed its acceptance to CDR package subject to following additional conditions, viz., the company shall clear the outstanding dues in respect of principal and interest from July, 2011 to March, 2012 in six monthly installments commencing from May, 2012 and instead of interest being paid in a ballooning manner, it shall be paid as agreed earlier. 14. On 29.05.2012, a consortium meeting was held wherein the opponent bank was having regard to the final stage of the approval of package wherein it was stated that NABARD
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should consider the request of the company from payment from June, 2012 instead of May, 2012 as insisting an immediate payment would jeopardize the entire efforts. Last consortium meeting was held on 31.05.2012 and it was decided that payment commitment from the company is from June, 2012 and the company should submit revised CMA data. The company responded by stating the CMA data can not be furnished because resources for payment were not available. 15. On 05.06.2012, the company received a notice under Section 13(2) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Though the matter of M/s. Mint Bio-Fuels Ltd. is not closely linked with the present complaint but it is submitted that the security charged to secure the loans is more than enough to take care of the alleged dues of the said lenders. The alleged dues as on the date of notice were Rs. 13,71,76,221/-. The value of the security worked out by the lenders own valuers comes to Rs. 26,40,59,850/-. Though M/s. Mint Bio-Fuels Ltd. did not generate any income yet the complainants no. 1 to 4 paid Rs. 7,31,51,997/- to the lenders out of their other businesses and as such the complainants are not willful defaulters. 16. The Company sent a reply to the notice on the following grounds:- (a) The conduct of lenders is self defeating and not conducive to their obligations as public sector undertaking. (b) The action contemplated is premature, unjust and illegal as well. (c) There is no failure on part of the Company in honouring its obligations and on the other hand the lenders have failed to evolve a workable restructuring package. (d) The conduct of the lenders is contrary to the spirit of CDR mechanism and its objectives. (e) There is a total want of sincere efforts on the part of the lenders and particularly on part of NABARD. (f) The time taken/wasted by lenders as observed by Chairman CDR EG has contributed to the alleged liability of the unit which is not acceptable to the promoters. (g) The proposed action is unethical, smaks of mala fides and is motivated by pre-decided course of action on part of NABARD officials. A copy of the abovementioned reply of the Company is enclosed and marked as Annexure D. This reply will show that the Complainants are not to blame for the any delay or mismatch in repayment schedule of the said loans granted to M/s. Mint Bio-Fuels Ltd. 17. The main borrower M/s. Mint Bio-Fuels Ltd. is a limited company having different persons and complainants no. 1 to 4 are guarantors. Complainant no. 5 is nowhere connected with the said loans and obligations. The said notice under Section 13(2) is a notice proposing exercise of Right of Lien and Right of Set-Off by a Banker. On 29.09.2012, the opponent banker issued a letter to complainants no. 1 to 4 stating that they are guarantors to loans to M/s. Mint Bio-Fuels and all the deposits belonging to them are put on hold and they should not operate their accounts. They were also informed that the opponent bank can not pay the amount of these deposits before maturity and can not sanction any loans against them. The complainants were also informed not to issue any cheques as those would be dishonored by the opponent. The complainants protested vide notice dated 27.09.2012. 18. On 26.09.2012, the opponent bank issued a letter to complainants no. 1 to 4 informing that the branch of the opponent is having various savings bank deposits and other deposits and the opponent has decided to exercise the Right of Set-Off over the said deposits and appropriate the proceeds towards part liquidation of amounts payable by M/s. Mint Bio Fuels Ltd. and to adopt appropriate legal proceedings against them for recovery of dues. On 27.09.2012 and 06.10.2012, the complainants issued legal notices. On 15.10.2012, the bank sent reply that the said account is released from the freeze. It is explained that the cause of action arose on 26.09.2012 when the opponent issued a letter to the complainants no. 1 to 4 informing that the branch of the opponent is having various savings bank deposits and other deposits and the opponent bank had decided to exercise the Right of Set-Off over the said deposits. Again it also arose on 22.09.2012 when the ECS was not implemented by the
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opponent though there was sufficient balance in the account of Mrs. Swati Ghaisas and as such a default was committed in remitting the EMI though the account had balance. The complainants have made the following prayers:- (a) The saving bank accounts may kindly be defrozen and the balances illegally diverted to the alleged liability of unrelated account be restored in the saving accounts of- (i) Mr. Yashwant Ghaisas and Mrs. Smita Ghaisas bearing Account No. 20003118874 & (ii) Mrs. Shalaka Sovale (Ghaisas) bearing Account No. 20003122799. (b) The term deposits more particularly listed in Opponent letter dated 28.09.2012 by which the Opponent illegally and unauthorisedly transferred an amount of Rs. 2,04,67,264/- (being the principal and interest on the term deposit) to the Cash Credit/Term Loan of M/s Mint Bio-Fuels Ltd may kindly be restored to their original tenures and after maturity or even before that, subject to rules applicable to that class of deposits be allowed to be withdrawn or otherwise dealt with as may be desired by the complainants. (c) Compensation of Rs. 3,53,270/- may kindly be awarded to Complainants being the interest till date on the term deposits from the date when the Opponent illegally and unauthorisedly exercised the right to set off over the said term deposits and for the gross deficiencies of service provided by the Opponent. (d) Exemplary compensation of Rs. 10,00,000/- may also be kindly awarded to the Complainants because of the malice shown by the Opponent towards the Complainants on account of mental agony and suffering undergone by the Complainants. (e) Cost of these proceedings may be saddled on the Opponent Bank. (f) Any other and further reliefs as the Complainants may be entitled to be granted. 18. It is clear that this case is covered under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Section 34 of the said Act is reproduced as hereunder:- 4. Civil Court not to have jurisdiction.- No Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993). (EMPHASIS SUPPLIED) 19. The National Commission is not empowered to arrogate to itself the powers which come within the jurisdiction of debt recovery tribunals. This matter is purely covered within the jurisdiction of DRT or DRAT. If there is any grievance against the notice under Section 13(2) of the SARFAESI Act that should be brought to the notice of the concerned authority. It is well settled that main creditor and the guarantors are equally responsible. There lies no rub for the bank to take action against the guarantor directly. It can not be alleged that he is adopting the policy of pick and choose. From the allegations stated above, there appears to be no deficiency on the part of the opposite party. In case the bankers are working within the ambit of SARFAESI Act, it cannot be said to be deficiency on the part of the bank. It must be established that there is deficiency on the part of the bank. In that case this commission can take action. For the reasons stated above, the complaint is dismissed at the stage of its admission. Nothing will preclude the complainants from approaching appropriate Forum as per law.
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J.M. MALIK
PRESIDING MEMBER
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VINAY KUMAR
MEMBER
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