Decided on January 07,2014

Soma Papers and Industries Ltd. Appellant
BANK OF INDIA Respondents


Raj Mani Chauhan, J. - (1.) THIS Appeal under Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act") has been directed by the original applicant (for convenience hereinafter referred as the "appellant") against the judgment and order dated 26th March, 2008 passed by Mr. K.P. Kotecha, the then Presiding Officer (learned P.O.), Debts Recovery Tribunal -1 (DRT), Mumbai in Securitisation Application (S.A.) No. 17/2007 (Soma Papers & Industries Ltd v. Bank of India), whereby the learned Presiding Officer has dismissed the aforesaid S.A. filed by the appellant. The relevant facts giving rise to the present Appeal in nutshell be stated as under: The appellant is a registered Company incorporated under the Companies Act, 1956, which was engaged in manufacturing and sale of various kinds of coated papers. The appellant's factory was set up in 1971 at Nasik (Maharashtra). The appellant availed various credit facilities sanctioned by Consortium of Banks i.e. respondent No. 1, Bank of India; respondent No. 2, Union Bank of India; respondent No. 3, Corporation Bank and respondent No. 4, Dena Bank. As per consortium arrangements, respondent No. 1, Bank of India was designated as the Lead Bank. Shri Krishna Kumar Somani and Shri Bharat Somani stood guarantors to the credit facilities availed by the borrower. The amount of credit facilities availed by the borrower was secured by creation of the joint equitable mortgage of the immovable properties and joint hypothecation of the movable properties by the borrowers and guarantors in favour of the consortium of Banks which are as follows: (1) Description of hypothecated mortgaged properties - - All stocks of raw materials WIP, finished goods of coated papers, carbonless and fluorescent, stores, spares, packing material, plant and machineries and all other movable items. (2) Mortgaged immovable properties - - All those pieces or parcels of land situated at Village Dashak and Panchak, Nasik, together with buildings and structures thereon, bearing Survey No. 8, and Hissa Nos. 8/18/2A, and 8/2B, admeasuring 28,200 sq. mtrs. or thereabout in the Registration District of Sub -district of Nasik, Maharashtra, including all plant and machineries attached to the earth or permanently fastened to anything attached to the earth (hereinafter referred to as the "Suit property")
(2.) INDISPUTEDLY the borrower and guarantors committed default in repayment of the installments of the credit facilities availed by them. Consequently, respondent Nos. 1 to 4 Banks classified the account of the appellant as Non -Performing Asset (N.P.A.). The respondent No. 1, as the lead Bank, proceeded under the SARFAESI Act, 2002 to recover the dues of the consortium of Banks. The Authorized Officer thereafter on 21st November, 2005 issued Demand notice to appellant under Section 13(2) of the SARFAESI Act, 2002, indicating the outstanding dues of all the consortium Banks as Rs. 3,55,99,263.06 (Rupees three crores fifty -five lacs ninety -nine thousand two hundred sixty -three and paise six only) dues as on date i.e.21st November, 2005. The Authorized Officer called upon the borrower to pay the outstanding dues as indicated in the notice within 60 days from the date of issuance of the demand notice. Admittedly, the borrower and the guarantors could not pay any amount towards the outstanding dues as indicated in the aforesaid demand notice. The record discloses that there had been exchange of letters between the appellant and respondent No. 1 Bank regarding the settlement of outstanding, etc. and the appellant has so many rounds of talks with officers of the respondent Bank for One Time Settlement (O.T.S.). The respondent No. 1 Bank settled claim of all the consortium Banks with the borrower on the basis of one time settlement (O.T.S.). The appellant was required to pay the settled amount within a given time schedule, as provided in the O.T.S. The appellant has to manage the amount for payment of the settled amount by selling the Suit property. The respondent No. 1 was ready to permit the appellant to sell the Suit property in order to pay the settled amount within given time schedule. The appellant brought one Shubham Developers, who was ready to purchase the Suit property.
(3.) CONSEQUENTLY , there had been a Tripartite agreement between the appellant, respondent No. 1 and Shubham Developers. Shubham Developers had paid Rs. 40.00 lacs too. It undertook to pay further Rs. 27.00 lacs before 15th June, 2006 and balance of Rs. 194.52 within 60 days thereafter, but Shubham Developers backed out to purchase the Suit property. The respondent No, 1, too, brought respondent No. 5, I.B. Enterprises, who also agreed to purchase the Suit property for Rs. 747.0 lacs, but it also could not purchase the Suit property. The appellant in this way, failed to pay the O.T.S. amount within the given time schedule.;

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