VYSYA BANK LTD Vs. MERIDIAN ELECTRIC CO

JUDGEMENT

(1.) THE applicant Bank the Vysya Bank Ltd., is a Scheduled Bank registered under the Banking Regulations Act, having its branches all over India and one of such branch to Mount Road, Chennai and also at Coimbatore which is now represented by its Chief Manager. THE applicant Bank has filed the present transferred application against the defendants and claims Recovery Certificate to be issued for a sum of Rs. 66,91,009.64 p. against them jointly and severally together with contractual rate of interest from the date of filing of TA till the date of realization. THE applicant Bank has further prayed for sale of Schedule mentioned properties. THE applicant Bank also prayed for the cost and other relief(s) which are necessary for rendering justice.

(2.) The brief facts raising to the present TA are that the D1, M/s. Meridian Electric Company is a partnership firm for which defendants D2 and D3 are its partners. The firm was engaged in the manufacture of winding wires, enamelled copper wires which are widely used in the electrical and electronic gadgets. The respondent company was stated on 1.7.1987 as Small Scale Industries and was also issued with a provisional registration certificate by the Director of Industrial and Commerce. The respondents further approached the applicant Bank for various credit facilities and the applicant Bank has sanctioned them a term loan of Rs. 25 lakhs on 24.5.1989 for purchase of plant and machinery. The said term loan was sanctioned under the IDBI refinancing facility with a leave period of one year from the date of disbursement in six half-yearly instalments. For availing of the above said loan facilities the D1 executed necessary loan agreements/documents such as demand promissory note, term loan agreement, hypothecation of movables, rate of interest, etc. In addition to the above, the D2 to D8 have also executed their personal guarantee for due repayment of the loan amount. The D8, being as power agent of D4 to D6, has executed a letter of confirmation of deposit of title deeds owned by them. Further the applicant Bank sanctioned Rs. 5 lakhs under OCC limits and Rs. 10 lakhs under Bill purchases limits and the defendants executed necessary loan agreements/documents for the same. The defendants executed acknowledgement of debts on 6.11.1990 and on 1.1.1992. After the commencement of production, the defendants did not repay the loan amount after the holiday period was over. The defendants vide their letter dated 12.12.1991 admitted that the factory premises had been locked and the factory was not functioning whereas the D1 in its letter dated 1.11.1991 had stated that the unit was running irregularly for the past three months. The D1 and the D2 were called upon the defendants to repay the overdue amounts as early as in 1991. Thereafter the whole of the operation of the loan account became standstill in the beginning of 1992. Therefore the applicant Bank issued lawyer's notice dated 10.10.1993 to the defendants recaling the advances made to the D1 from all the defendants. However, the defendants in spite of repeated demands made and remedies issued failed in and neglected to comply with the terms and conditions of the loan nor repaid the loan amount due. Hence the applicant Bank has to file the present transfer application before Madra High Court as C.S. No. 501/ 94 and prayed for justice. After the enactment of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 the same was transferred to this Tribunal and renumbered as TA 288/1997.

(3.) THE D8 in his counter denied the allegations made by the plaintiffs. He denied that bogus bills were ever floated by the defendants and D1 firm was managed by him and not by D2 and D3 as alleged. He further stated that he was the authorized signatory of the D1 firm and not for any other firm. THE D2 and D3 were not involved in any transaction with Central Bank of India. THE plaintiff with a view to camouflage the fraudulent and unethical conduct of their Managers have twisted the facts and made unwarranted allegations against him and other defendants. He further denied the allegation stating that he never siphoned off money from any Industrial Unit nor involved in obtaining loans as authorized signatory. He further stated that the plaintiffs have made fictitious allegations against him and other defendants which were defamatory and libelous and the plaintiff Bank should be called upon to produce documentary evidence for the same. THE defendants never made any attempt to sell the plant and machinery. THE negligent attitude of the plaintiffs failure to provide adequate financial assistance had led to the closure of a highly profitable and essential rate industrial unit. THE D8 thus has prayed for dismissal of the suit with costs.