VENKATESHWARA GARMENTS AND EXPORTS Vs. DENA BANK
LAWS(DR)-2004-3-14
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on March 15,2004

Appellant
VERSUS
Respondents

JUDGEMENT

Pratibha Upasani, - (1.) THIS Misc. appeal is filed by the appellants/original defendants being aggrieved by the order dated 4.12.2003 passed by the learned Presiding Officer of the Debts Recovery Tribunal, Nagpur in Interlocutory Application No. 189/2003 in Original Application No. 341/2001. By the impugned order, the learned Presiding Officer rejected the application made the appellants, wherein they had sought directions from the Tribunal to the applicant Bank to take possession of the hypothecated goods lying at M/s. Shivan Enterprises, Gangapur Road, Nagpur and to sell the same and adjust the sale proceeds thereof towards the loan account of defendant No. 1 namely M/s. Venkateshwara Garments and Exports.
(2.) Few facts, which are required to be staled are as follows: The respondent No. 1 Bank namely Dena Bank had filed the original application No. 1296/2000 against the defendant/appellants herein in the Debts Recovery Tribunal, Mumbai for recovery of Rs. 17,18,552-75 paise with costs and future interest. Thereafter, in view of the establishment of Debts Recovery Tribunal at Nagpur, the case was transferred there and was renumbered as Original Application No. 341/2001. During the pendency of the original application and when the case was posted for final hearing, the defendants came up with an application with the story that the defendant No. 1 had stated the business of manufacturing shirts along with son, by name Mr. Siddharth Patel, of Mr. Deepak Patel, who was the Chief Manager of the applicant Bank at the relevant time. As per the narration in the story of the appellants, it was decided that the defendant No. 1 would be proprietary concern and Mrs. Rashmi Ajay Jainarayan would be the proprietress. According to this story of the appellants, Mr. Siddharath Patel was to help Mrs. Rashmi A. Jainarayan in the business and for that purpose, the then Chief Manager Mr. Deepak Patel had sanctioned the loan in question and that there was clear understanding that the amount would be repaid by defendant No. 1 and Mr. Siddharth Patel jointly. The appellants have further narrated that after disbursement of loan to the tune of Rs. 3,25 lacs as term loan and Rs. 4 lacs as cash credit hypothecation limit, defendant No. 1 and Mr. Siddharth Patel had purchased machineries worth of Rs. 2 lacs and after setting up the unit, the unit was started in the name of M/s. Venkateshwara Garments and Exports. It is further averred that six to seven months thereafter, dispute arose between the defendant No. 1 and Mr. Siddharath Patel and ultimately it was decided that the defendant No. 1 alone would run the business through the proprietress Mrs. Rashmi A. Jainarayan. The story goes still further and it is averred that in the month of September, 1996, the defendants had been out of station and that taking advantage of their absence, the then Chief Manager of the applicant Bank Mr. Deepak Patel and his son Mr. Siddharth Patel visited the business premises of defendant No. 1 along with a truck and removed all the machineries and other equipments and also carried away stock worth of Rs. 1.50 lacs. As per the appellants' version, the defendants came to know about the removal of the machineries by Mr. Deepak Patel and Mr. Siddharth Patel after they came back to Nagpur. They then immediately contacted Mr. Deepak Patel and protested while Mr. Deepak Patel allegedly told them that there was no alternative but to attach and sell all the machineries for liquidating the account as the same had become irregular. In December, 1996, as per the version of the appellants, they came to know that Mr. Deepak Patel had not sold the machinery and liquidated the account or had deposited the amount from the sale proceeds, but had shifted the machineries to Nasik and had started business in the name of his son by name M/s. Shivam Enterprises, Gangapur Road, Nasik. The defendants wrote various letters and protested and also informed the applicant Bank, but there was no response. According to this story, prayer is made by the defendants that all the hypothecated goods, which were lying in the custody and possession of Mr. Deepak Patel and which were lying at Nasik, should be attached and sold and sale proceeds be directed to be deposited in the loan account of defendant No. 1. The applicant Bank filed reply to the said application made by the defendants stating that the loan was sanctioned to the defendant No. 1 M/s. Venkateshwara Garments and Exports through its proprietress Mrs. Rashmi Ajay Jainarayan and the operations of the account were done by said Mrs. Rashmi A. Jainarayan. It was vehemently denied by the Bank that the defendant No. 1 and Mr. Siddharth Patel had jointly purchased the machinery of the said concern. It was protested that for the first time, the defendant No. 1 had taken the shelter of the name of Mr. Siddharth Patel, son of Mr. Deepak Patel, the then Chief Manager of the applicant Bank. Grievance was made that false allegations contrary to the loan documents executed and signed by the defendant No. 1 were made by the defendants. It was stated that, it was learnt by them that the defendant No. 1 was responsible for the removal of machinery of defendant No. 1 firm only, to save themselves from the clutches of the loan taken by them from the applicant Bank. According to the Bank's reply, the defendant No. 1 was in collusion with defendant No. 2 and sold the machineries and hypothecated goods without knowledge and consent of the applicant Bank and the machinery was not found at the premises of defendant No. 1 firm when Bank officials visited the said premises. Submitting this, it was prayed that the application made by the defendants be dismissed.
(3.) THE learned Presiding Officer after hearing both the sides and after perusing the records, found out that all the loan documents were executed by the defendant Nos. 1 and 2 in favour of the applicant Bank, that the statement of account also reveals that the defendant No. 1 firm had utilized the loan amount for its business and that defendant No. 2 had also created equitable mortgage in respect of the agricultural land situated at Gondkhari, Tahsil Kalmeshwar, District Nagpur. THE record also reveals that on 10.10.1995, the proprietress Mrs. Rashmi A. Jainarayan of the defendant No. 1 firm had also addressed a letter to the Chief Manager of the applicant Bank requesting for sanction of temporary ad hoc limit up to Rs. 4.6 lacs and that in the said letter there was no whisper that entire loan amount was utilized by the son of Mr. Deepak Patel, the then Chief Manager of the applicant Bank and that for the first time, the defendant had come up with this version. THE learned Presiding Officer therefore colluded that neither Mr. Deepak Patel nor his son Mr. Siddharth Patel were borrowers or guarantors for the loan advanced to the defendant No. 1 and that they were no way connected with the loan transactions between the applicant Bank and the defendant No. 1, the learned Presiding Officer observed that Mr. Deepak Patel or his son Mr. Siddharth Patel were third parties to the present proceedings and no order could be passed against them. He further observed that possibility of collusion of the defendants with intention to evade the loan amount could not be ruled out. Observing this, the learned Presiding Officer rejected the said application branding it as 'frivolous' and saddled the defendants with exemplary costs of Rs. 10,000/- payable by the defendants to the applicant Bank by way of demand draft on or before 18.12.2003, failing which interim recovery certificate was to be issued in favour of the applicant Bank for recovery of exemplary costs.;


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