SYNDICATE BANK v. MS CORPORATE SERVICES AND OTHERS

2

The defendant no. 1, is proprietorship firm, having business in Jharkhand region. Defendant no. 2 is proprietor of Defendant No.1. The defendant no. 3 is stood as guarantor and given personal guarantee to repay the loan of defendant no.1. The Defendant No. 3 created equitable mortgage in favour of the applicant bank to secure the loan of defendant No.1.

Defendant no.1 through Defendant No. 2, approached the applicant bank for grant of Cash Credit facility of Rs.12.00Lacs, which was sanctioned by the bank on 24.9.2012.

In order to above cash credit facility to secure the loan, the defendants have executed various loan documents i.e. D.P. note, Composite Hypothecation agreement, Guarantee agreement, Confirmation of deposit of title deed, all dated 26.9.2012. The defendant No. 3, created equitable mortgage, by depositing Lease deed no. 2273 dated 4.6.2004 to secure the entire limit on 26.9.2012 through confirmation of deposit of title deed. The details of the mortgage property as under:-

All that a Residential House, being Block/Holding No. 281/2-1, Measuring an area 1053 sq. ft., situated at - Adityapur Housing Colony, PO-Adityapur, PS-Adityapur, District Sub-Registry office, Distt.- Seraikella-Kharaswan, Jharkhand, which is bounded by :-

North - Boards Land

South - Road

East - 281/2-3

West - Boards Land.

The defendants agreed to repay the amount, availed with interest at the rate of 17.50% p.a. with monthly rests in Cash Credit account, subject to rise and fall according to RBI Guidelines/circulars. After availing the credit facility, the defendants, failed to maintain the financial norms of the bank and they have contravened the terms and conditions of the agreement and are avoiding the repayment, inspite of several requests and demands, made by the bank, therefore, the account was finally declared as NPA on 31.5.2015 and the bank has issued Demand notice dated 2.5.20015 to the defendants for repayment, but of no use.

As per the books of account, maintained by the bank, the outstanding comes to Rs.19,25,926.47 as on 30.6.2017, due and owing by the defendants in account and the defendants are liable to pay the same with further interest from 1.7.2017 till realization in full. Since, the defendants have failed and neglected in spite of several reminders to make payment of the dues recoverable to bank, hence this application has been filed by the bank.

3

4- U/s 19 (4) of the Act & Rule of the DRT [Procedure] Rules, 1993, copies of application & paper book were sent by this Tribunal to the defendants by registered/speed post on 25.9.2017and summons/ notices issued, requiring the defendants to show-cause within 30 days of the service of summons/notices as to why relief prayed for, should not be granted.

On perusal of the case records, it is seen that on 25.9.2017, summons/notices were sent to the defendants and paper publication of notice was published in "Prabhat Khabar", Jamshedpur edition dated 4.11.2017, but the Defendants have not appeared. Despite the registered summons/notices and paper publication of notice, the defendants have not appeared before this Tribunal to contest the case. The sufficient time has been given to the defendants to defend their case, but they failed to appear and to file WS, hence, the Tribunal has passed an order to proceed ex-parte against the defendants on

18.7.2019.

5- To prove it's case, the applicant Bank has referred various attested photocopies of loan documents, attached with the Original Application. The applicant bank has also given evidence on affidavit, attached with the Original application, by way of affidavit of Miss Sonu Tiwari, Branch Manager of the applicant bank. The details of attested photocopies of loan documents are as follows. :-

6- Opportunity of hearing has been fully given to both the parties, but

despite several opportunities given to defendants, the defendants have not

4

appeared to contest the case, hence, the exparte arguments of learned counsel for applicant bank were heard. Perused the case record and considered.

Ld. Counsel of applicant bank submitted that the defendants have taken the loan facility from the bank and utilized the same and also executed the various loan documents to secure the loan facility. Further, submitted that the claim of the bank has been proved by documentary evidence. It is further submitted that the defendants have not deposited any amount, after filing of the OA.

It is further submitted by ld. Counsel of applicant bank that there is no any stay granted by any Higher Court, in respect of the proceedings of the present OA and requested to issue recovery certificate, as claimed for, in OA.

7- It has been established that defendants are living and carrying on their business in the state of Jharkhand. Cause of action also arose in the State of Jharkhand. The said claim on the date of filing of application exceeded Rs.10 lacs. The applicant bank is functioning within jurisdiction of this tribunal. Therefore, this Tribunal has territorial as well as pecuniary jurisdiction to adjudicate upon the present application. 8- On the issue of Limitation, to prove it, the applicant bank has submitted that the applicant bank has declared the account as NPA on 31.5.2015, whereas the present application has been filed on 28.7.2017. Even, it is counted for the purpose of Limitation, then it is established that the applicant bank has filed the case within the limitation period. As such, it is established that present application has been filed well within the period of limitation.

9- In the affidavit of Miss Sonu Tiwari, Branch Manager of the applicant bank, has stated that he is well acquainted with the facts of the case and has on verification of record, sworn in the affidavit in support of contents of application and the documents as evidence and established on oath the pleadings and documents of the applicant bank as stated above. The documents as stated above reveal that the defendants have applied for loan and the bank had sanctioned the loan and to secure the loan and for repayment of loan amount with interests etc., the defendants have executed various loan documents, which strength the case of the applicant bank.

The applicant bank has also furnished statement of account as above, which is not only admissible but shall be taken as correct statement of account, more so since the entries in the statement of account has not been challenged.

10- Since, the defendants were proceeded exparte, all contentions raised and documents produced by plaintiff remained unrebutted and the

5

tribunal may act upon the affidavit of the applicant as per law. Defendants have neither denied the utilization of funds advanced by applicant bank nor have pointed out any specific error and discrepancy in the Statement of Account, which is kept in due course of business, evidence on affidavit, which has supported the claim of the applicant bank, established to have fully correct and believable.Provisions contained in Section 4 of the Banker's Books Evidence Act, 1891 apply to certified copies of entries in banker's book furnished along with the application filed under section 19[1] of the Act. Hence, the entries in the Statement of Account are also proved.

11- On consideration of the arguments and on perusal of the application, documents and affidavit, it is proved that the applicant bank has granted the loan facility, documents were executed by the defendants and facility was availed by the defendants as stated in the application. 12- In the present case, the applicant bank has sanctioned the loan facility to the defendants and due to non-payment, the account of the defendants was declared as NPA on 31.5.2012, with NPA amount of Rs.17,12,298/-, While the applicant bank has filed the OA, for recovery of Rs.19,25,926.47 as on 30.6.2017, by adding the interest and penal interest.

But on perusal of the statement of account and loan documents, including sanction letter, it appears that the applicant bank has charged the rate of interest on higher side along with the penal interest. Therefore, the applicant bank is entitled to get the recovery certificate for the NPA amount of Rs.17,12,298/-as on 31.5.2015 with interest @ 10 % p.a. simple till realization.

13- None of the defendants appeared before the tribunal to contest the claim made by the applicant, therefore, it necessarily goes to establish that the claim made by the applicant bank is genuine and true. It is manifest that the defendants have not disputed the claim, therefore, the claim referred to the tribunal is recoverable till full and final realization of the claim.

14- In Indian Bank Vs. Blue Jaggers Estates Limited and others [2010]

8 SCC 129, the Hon'ble Supreme Court of India has observed as under-

"The Court cannot lose sight of the fact that the bank is a trustee of public fund. It cannot compromise the public interest for benefiting private individuals. Those who take loan and avail financial facilities from the bank are duty bound to repay the amount strictly in accordance with the terms of the contract. Any lapse in such matters has to be viewed seriously and the bank is not only entitled but duty bound to recover the amount by adopting all legally permissible methods. Parliament enacted the act because it was found that legal mechanism available till then was wholly insufficient for recovery of the outstanding dues of the banks and Financial Institutions."

6

15- Facts of the case, in my view, are well proved by evidence of the applicant bank. The applicant bank is entitled to receive from defendants, jointly and severally of Rs.17,12,298/-alongwith pendentelite and future interest @ 10% p.a. simple from 1.6.2015 till realization. So the final order may be passed accordingly, to meet the ends of justice.

ORDER

In the result, the application of the applicant bank is, allowed exparte and debt is determined with costs against the defendants and it is, hereby, ordered that the applicant bank is entitled to receive from defendants, jointly and severally, it's debts with interest, amounting to Rs.17,12,298/-alongwithpendentelite and future interest @ 10% p.a. simple from 1.6.2015till realization of the entire sum due and recoverable with costs.

It is made clear that any amount deposited by the defendants, be deducted in the claim amount, if not deducted.

Defendants are debarred from transferring, alienating encumbering or otherwise dealing with or disposing of the mortgaged or hypothecated or any other properties and assets without paying the aforesaid adjudicated dues to the applicant bank to secure the ends of justice. Let a certificate of recovery be drawn up forthwith and put up for signatures in terms of provisions contained in Section 19(22) of the Act to be issued, on the basis of the order of the Tribunal to the Recovery Officer. The Recovery Officer shall realize the amount as per the certificate in the manner and mode prescribed under the Act from the defendants, by sale of mortgaged/ hypothecated assets as well as other personal movable/immovable assets of the defendants. Parties are directed to appear before the Recovery Officer, DRT, Ranchi on_9.10.2019. The order be communicated accordingly. Judgment signed, sealed, dated and pronounced in the open court on this 17^th. Day of August, 2019.

Dictated & Corrected by me

Sd/- Sd/-

(R. M. Kushawaha) (R. M. Kushawaha)

Presiding Officer Presiding Officer

Debts Recovery Tribunal, Ranchi Debts Recovery Tribunal, Ranchi (Holding additional charge) (Holding additional charge)