BANK OF INDIA Vs. AUTAM CARBON PAPER MANUFACTURING CO. PVT. LTD.
LAWS(DR)-2007-5-3
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on May 24,2007

Appellant
VERSUS
Respondents

JUDGEMENT

R.S. Tripathi, J. (Chairperson) - (1.) THIS appeal arises out of a judgment dated 4th June, 2002 passed by Presiding Officer, D.R.T., Jabalpur (M.P.) in T.A. No. 362 of 1998, Bank of India v. Gautam Carbon Paper Manufacturing Company Pvt. Ltd., issuing recovery certificate for a sum of Rs. 41,56,412.09 and interest as per terms of the contract from 15th May, 1992 till the date of realization, declining to accept the plea of Bank for equitable mortgage.
(2.) BRIEFLY stated the facts giving rise to this appeal as per memo of this appeal are that the appellant Bank of India filed a Civil Suit No. 83/1992 against the defendant -respondents for recovery of a sum of Rs. 41,56,412.09 along with interest and costs before the Court of District Judge, Gwalior (M.P.). This suit was transferred to D.R.T., Jabalpur after the constitution of D.R.Ts. and there it was registered as T.A. No. 362/1998. The Bank had pleaded in the above suit that the respondent No. 1 Gautam Carbon Paper Manufacturing Company Pvt. Ltd. on its request was provided with financial assistance by way of term loan of Rs. 20 lacs and cash credit facility of Rs. 14 lacs along with bill purchase facility by the appellant Bank. It is said that the defendant Nos. 1, 2 and 3 (now deceased and substituted by their legal representatives) executed various security documents to secure the repayment of the loan and the defendant Nos. 2, 3,4 and 5 executed the guarantee for repayment of the credit facility in favour of the Bank. The Board of Directors of the defendant company had passed a resolution to borrow the term loan and to avail the cash credit facility and the defendant Nos. 2 and 3 who were the directors executed security documents and acknowledgement of confirmation of debt and security for and on behalf of the defendant company. The appellant Bank granted ad hoc loan facility of Rs. 5 lacs on 8th October, 1988 and an additional amount of Rs. 3 lacs on 11th March, 1989 to meet out the urgent requirements of the defendant No. 1 before the sanction of credit facilities. The above ad hoc facility account was closed on 15th May, 1989 and balance of outstanding in that account was Rs. 7,94,455.68 which was transferred to the new terms loan account opened on the date of sanction of the regular term loan facility. According to the Bank, defendant Nos. 3 and 4 created equitable mortgage in favour of the Bank by depositing title -deeds and giving oral assent which was recorded in relevant register maintained by the Bank known as register of loan securities for granting of loan facilities in question. Defendants failed to maintain financial discipline with regard to the loan and credit facility, ultimately, after issuing notices for the repayment of the amount due, civil suit was filed before District Judge, Gwalior (M.P.) for a sum of Rs. 41,56,412.09. This suit was later on transferred to D.R.T., Jabalpur. Above suit was contested by the defendants before D.R.T. Jabalpur admitting the term loan of Rs. 20 lacs and cash credit facility of Rs. 14 lacs. The defendants further pleaded that under the term loan and facility of bill purchase the amount of Rs. 14 lacs and 5 lacs were sanctioned but were actually not paid to them and the total amount in this connection paid to them was Rs. 8.91 lacs only withholding an amount of Rs. 10.09 lacs. They further pleaded that on account of shortage of fund the defendants were unable to run their factory resulting in loss of their business. The defendants had also denied execution of any document and giving of any assent for equitable mortgage and they contested the suit challenging the amount claimed by the Bank from them.
(3.) THE learned D.R.T. after considering the documentary as well as evidence in the form of affidavits filed by the parties decreed the suit for recovery of a sum of Rs. 41,56,412.09. While pronouncing the above judgment learned D.R.T. did not accept the case of the appellant Bank that the equitable mortgage was created by the defendant Nos. 3 and 4 for availing of the aforesaid loan and cash credit facility in respect of immovable property, consequently, the D.R.T. declined to pass any order in respect of the immovable properties of the defendants.;


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