CENTRAL BANK OF INDIA Vs. RAINDROP EQUIPMENTS INDIA LTD
DEBTS RECOVERY APPELLATE TRIBUNAL
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(1.) THIS is an application for recovery of Rs. 22,10,176.90 Ps. with interest @ 21.25% per annum from the date of filing the O.A. till payment.
(2.) The 1st defendant, Private Limited Company, manufacturing sprinkler systems is the borrower. Defendant Nos. 2 to 6 are the Company's Directors but sued as the guarantors.
In October 1988, the defendant No. 1 approached to applicant for credit facilities limit to the tune of Rs. 10 lakhs. The applicant sanctioned cash credit (hypothecation) limit of Rs. 5,90,000/- and L.C. to the tune of Rs. 4 lakhs. On or about 31.10.1988 the 1st defendant through its directors executed Demand Promissory Note, agreement of hypothecation and usual security documents and guarantors gave letter of guarantee. On 12.3.1989, the L.C. limit was merged into cash credit facility to become Rs. 9,90,000/-. The defendant No. I executed fresh set of documents and other defendants executed new letter of guarantee. Upon further request of the directors of 1st defendant, the applicant sanctioned further cash credit facility of additional amount of Rs. 8,10,000/- in March, 1992. At this time also fresh set of security documents were executed, the directors also giving letter of guarantee,
(3.) THE defendant No. 1 availed of the credit facilities. THE account however was not operated satisfactorily. THEre were dues in excess Rs. 31 lakhs of M.S.F.C, which had first charge over the land, building, plant and machinery. THE M.S.F.C. took possession of its security under Section 29 of State Financial Corporation Act in June 1992. THE applicant Bank, on being so informed by M.S.F.C., on 27,7.1992 took possession of its security i.e. hypothecated stocks at Amravati to valuing Rs. 12,10,659.20 Ps. It is contended that n the absence of cooperation, the Bank could not proceed against the goods kept in godown. THE efforts of the applicant to call tenders from prospective purchasers by communication by publication of notice have not yielded any result. THE goods were subsequently required to be shifted to other godown. Since the payment was not made, this O.A. is filed for recovery of the amount stated in the beginning.;
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