LORD KRISHNA BANK LTD Vs. STAR HOMES
LAWS(DR)-2003-8-10
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on August 18,2003

Appellant
VERSUS
Respondents

JUDGEMENT

A.Subbulakshmy, - (1.)THE defendants have filed this appeal URA-7/2003 for dismissing the Original Application (OA) by modifying the order dated 5.11.2002 in the OA. In this appeal, the appellants contend that the Tribunal ought to have waived the entire interest on the principal amount and the Tribunal ought to have granted relief taking into consideration the loss sustained by the defendants due to the acts and omissions on the part of the applicant Bank and the Bank is also liable to compensate the defendants for the loss and even the Court directions to release the flats on payment were not obeyed by the respondent Bank. THE appellant further contends that the OA is barred by limitation and the equitable mortgages are not valid and the whole transaction of the Bank with the appellant is substantially unfair and only time-barred debts were converted as new demand loan and hence the OA is liable to be dismissed.
(2.)The Bank filed Original Application (OA) against the defendant respondents for the amount due from the defendants for a sum of Rs. 3,22,44,991/-. The Tribunal by order dated 5.11.2002 allowed the OA for Rs. 1,96,72,989/- with interest at 6% per annum thereon from 1.10.2001 till date of the order less Rs. 100,94,000/- plus interest at the same rate. Aggrieved against that order with regard to the disallowed portion of the claim, the appellant Bank has preferred this appeal RA-3/2003.
Counsel for the appellant Bank submitted that the defendants availed overdraft facility, the defendants 1 and 2 were enjoying the over draft facility, the 1st defendant was enjoying the overdraft facility of Rs. 25 lakhs and a demand loan of Rs. 75 lakhs from the applicant Bank and repayment of loans was also secured by equitable mortage over A-Schedule properties by way of collateral security by deposit of title deeds by defendants 4 to 6, the 2nd defendant was also enjoying the overdraft facility for Rs. 1,50,00,000/- for its business purpose and repayment of the loan amount by D2 was also secured by equitable mortgage by way of collateral security by deposit of title deeds by D3 to D6 over Item Nos. 1, 2 and 3 of C-Schedule property and over D-Schedule property by D3 on behalf of D2 and D7 to D10. Thus, at the instance of D1, the balance amount outstanding by D1 was converted into Demand Loan of Rs. 90 lakhs on 16.8.2000 and the repayments thereof were secured by defendants 1 and 3 to 6 executing security documents oh the same day, including demand Promissory Note, take delivery letter partnership letter, guarantee agreement and power of attorney in favour of the Bank, besides the extension of equitable mortgage already erected over the A-Schedule properties on 21.11.1995 and fresh creation of equitable mortgage over B-Schedule properties by way of continuing collateral security by deposit of little deeds by defendants 4 to 6. The overdraft facility availed by D2 was also converted into a Demand Loan of Rs. 1,75,00,000/- at the instance of D2 on 16.8.2000 and the repayments thereof were secured on the same day by defendants 2 and 3 to 6 by executing security documents including demand promissory note, take delivery letter, guarantee agreement and power of attorney, besides the extension of equitable mortgage already created over the C-Schedule properties on 18.5.1996 and 13.6.1996 by D3 to D6 and over the D-Schedule properties on 11.2.1999 by defendants 3 and 7 to 10. According to the appellant-Bank, no . payment of any amount was made in spite of repealed demands and so the OA was filed.

(3.)COUNSEL for the appellant-Bank submits that while allowing the OA, the PO. DRT reduced the claim amount to a considerable extent and allowing of the OA for Rs. 1,96,72,989/- with interest at 6% p.a. from 1.10.2001 when the claim amount itself was for Rs. 3,22,44,991 /-, is not proper and without any basis the PO, DRT, has reduced that amount to a large extent and the appellant Bank is entitled for the amount claimed in the OA. COUNSEL for the respondents submitted that the loan was availed by the defendants 1 and 2 on overdraft facility and the alleged conversion of the loan into Demand Loan as contended by the Bank is not correct and the defendants 1 and 2 never signed any Promissory Note and other connected documents and these defendants' signatures were obtained in blank papers by the Bank and those papers have been utilised for the creation of these documents and the conversion of that loan itself is not proper and the PO, DRT has passed Order based on the NPA amount under the One Time Settlement (OTS) scheme and the Order passed by the PO, DRT does not warrant any interference by this Appellate Tribunal.


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.