O.A. No. 180 of 2001. Case: Central Bank of India Vs Vidarbha Elastomers Profiles Pvt. Ltd. and Ors.. Nagpur Debt Recovery Tribunals

Case NumberO.A. No. 180 of 2001
Party NameCentral Bank of India Vs Vidarbha Elastomers Profiles Pvt. Ltd. and Ors.
CounselFor Appellant: M.D. Samel, Adv. and For Respondents: H.M. Chandurkar, Adv.
JudgesK.J. Paratwar, Presiding Officer
IssueBanking Law
CitationII (2005) BC 205
Judgement DateMay 05, 2005
CourtNagpur Debt Recovery Tribunals

Judgment:

K.J. Paratwar, Presiding Officer

  1. The borrower company (defendant No. 1) and its directors (defendants 2 and 3) in their capacity as guarantors have been sued in this O.A. for recovery of Rs. 37,21,367.83 towards Cash Credit A/c; Rs. 5,61,463.80 towards Cash Credit (Project); Rs. 6,14,083.29 towards Overdraft Account; and Rs. 15,12,200/-towards Term Loan Account.

  2. The 1st defendant manufacturing high pressure braided hoses, rubber moulded parts and swazed super high pressure hose assemblies is the applicant's constituent since 1984. At its request, the applicant on 10.4.84 sanctioned loan/facilities namely Cash Credit (Open) --Rs. 2.5 lakhs; Overdraft -- Rs. 2 lakhs; Bill purchase --- Rs. 0.75 lakhs; and Project loan -- Rs. 3 lakhs; against personal guarantee of defendant Nos. 2 and 3. The defendant No. 1 had created 3rd charge over the assets in the applicant's favour. MSFC and DCVL had also financed the 1st defendant. In December, 1990 the facilities/loan were renewed and enhanced to become Cash Credit (Open) -- Rs. 14.74 lakhs, Term Loan (Funded) -- Rs. 6.40 lakhs; Overdraft (Supply Bills) -- Rs. 3 lakhs and Cash Credit of project finance Rs. 3 lakhs again on personal guarantee of defendant Nos. 2 and 3 and hypothecation of the movables. In lieu thereof, the borrower and guarantors executed usual security documents and letters of guarantee. The borrower availed of the loan/facilities. But, it committed several breaches of the agreement and did not make repayment. Yet on the 1st defendant's request, Cash Credit (project finance) of Rs. 3 lakhs was sanctioned in 1993 also on guarantee of defendant Nos. 2 and 3. The security documents/ letters of guarantee were again executed. The payments, however, did not come forward even thereafter although on 21/22 October, 1993 letters of acknowledgement confirming the then balance were given. In fact, on 2nd December, 1993 fresh security documents including D.P. note in respect of the then outstanding under Cash Credit were executed. But the payments were not made even thereafter and also despite repeated demands and legal notice.

  3. The applicant has averred that it has learnt from MSFC that the latter had taken possession of 1st defendant property for recovery of its dues. MSFC in fact sold the immovable property and handed over possession thereof to the purchaser on 28.9.1995. The applicant was, in these circumstances, compelled to take possession of the hypothecated assets which is required to be sold. In the aforesaid circumstances, the applicant is constrained to file this O.A. for recovery of the ledger balance under different accounts and unapplied interest.

  4. The defendants by their common written statement (Ex.12) filed in the Tribunal on 22.2.2002 have not denied the availment of loan/credit facilities in 1984 and the renewal/ enhancement in the year 1990 and the execution of necessary security documents as also letters of guarantee in lieu thereof. They have, however, come up with case that the Bank did not sanction anything after 1990. The O.A., therefore, is said to be barred by limitation. The execution of any...

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