Original Application No. 2404 of 1999. Case: Central Bank of India Vs Mansukhlal Bhaichand Timbodia and Ors.. Mumbai Debt Recovery Tribunals

Case NumberOriginal Application No. 2404 of 1999
CounselFor Appellant: Pragna Thakkar and Co. and For Respondents: Bhat and Co.
JudgesA.G. Mishra, Presiding Officer
IssueBanking Law
CitationIV (2005) BC 228
Judgement DateFebruary 08, 2005
CourtMumbai Debt Recovery Tribunals


A.G. Mishra, Presiding Officer

  1. This suit is filed for recovery of Rs. 68,63,248.50 ps. (Rupees sixty-eight lacs, sixty-three thousand, two hundred forty-eight and fifty paise only), with costs and interest, which is filed on 29.4.1986.

  2. In brief, the facts of the case are as follows:

    The defendant No. 1 is the Sole Proprietor, carrying on business in the name and style of Messrs Hindustan International. The defendant No. 6 is the wife of the brother of defendant Nos. 2 and 3 and claims to be lessee of the land described as per Exhibit 'D'.

  3. The defendant No. 6 has created equitable mortgage of the said land in favour of the applicant Bank as security for the amount due as set out in the Original Application.

  4. On or around September/October 1980, and from time-to-time thereafter, the applicant Bank granted in favour of the defendant No. 1 various Banking facilities and advanced large amount to the defendant No. 1. The defendant No. 1 by his letter dated 4.10.1980, declared that he was the Sole Proprietor of the said Hindustan International. The defendant No. 1 by his letter dated 9.10.1980 informed the applicant that the defendant No. 1 has signed and executed Power of Attorney in favour of one Hiten D. Shah, defendant No. 3. The said letter is countersigned by Hiten D. Shah as constituted attorney.

  5. Various facilities were sanctioned, that are: Term Loan Account No. 1 (land and building), to the extent of Rs. 2,70,000/-, for construction of factory building thereon. The said loan was disbursed to the defendant No. 1 on execution of the security documents on 4.10.1980.

  6. In November 1981, in pursuance of the application made by the defendant No. 1, the applicant sanctioned further term loan of Rs. 76.000/- on account of increase of the cost of the construction. The defendant No. 1, however, failed and neglected to repay the amount as agreed in or about March 1983 and he applied for rephrasing of the instalments.

  7. Pursuant to the request, the applicant Bank agreed to continue the said Term Loan facility and to rephrasing of the instalments. The defendant No. 1 executed the following documents in respect of the Term Loan account, i.e. Demand Promissory Note dated 16.8.1983 by the defendant No. 3 for Rs. 3,46,000/-, whereby he agreed to pay interest @ 12% p.a. with quarterly rests, the Letter of Interest dated 16.3.1983, then Agreement dated 16.3.1983, whereby the defendant agreed to repay the amount with instalment of Rs. 14,310/-. The defendant No. 3 hypothecated the movable properties mentioned in the Schedule to the said agreement, including the machinery equipment plant and spare parts, by the Deed of Hypothecation.

  8. On 13.6.1983, the defendant No. 6, who claimed to be the lessee of the immovable property, deposited the original receipt of the Sub-Registrar of Assurances showing that the Deed of Lease was lodged for registration by way of equitable mortgage. She has also submitted copy of the Lease Deed dated 14.9.1982. There is balance confirmation on 1.7.1983. There is also balance confirmation on 1.7.1983.

  9. For the Term Loan-II, for plant and machinery, on 16.3.1983, the documents were executed i.e. Demand Promissory Note. Letter of Interest, Agreement, Deed of Hypothecation for Rs. 3,00,000/-. There is also balance confirmation on 1.7.1983, admitting the sum of Rs. 2,43,836.30.

  10. For the Overdraft facility of Rs. 3.00 lac, various documents of security were executed. There is balance confirmation to the tune of Rs. 2,93,886.06 ps. on 1.7.1983. The defendant No. 3 has signed and executed the Demand Promissory Note, Letter of Continuity, Letter of Hypothecation on 20.9.1983.

  11. In the Trust Receipt Account to the tune of Rs. 8,50,000/- for buying the machinery for their said factory, the amount of Rs. 1,26,989.30 ps. was due and payable by the defendant No. 1, wherein the defendant No. 1 agreed to pay interest @ 13.5% p.a. with quarterly rests. The defendant No. 2 guaranteed the repayment.

  12. In or about February 1981, applicant Bank granted to the defendant No. 1, Revolving Letter of Credit Facility with a limit of Rs. 37.00 lac. The applicant Bank accordingly opened Letter of Credit from time-to-time in favour of the defendant No. 1 for Boiler Quality Plates. The defendant No. 1 failed and neglected to retire the documents and to take the delivery of the said goods on retirement of the said documents and payment of large amounts to the foreign sellers, in July 1981. The Defendant No. 1 represented to the applicant that he would sell the said imported Boiler Quality Plates on behalf of the applicant and agreed and undertook to hand over to the applicant the said imported quality boiler plates of defendant No. 1, on executing in favour of the applicant Bank various documents, that are--Demand Promissory Note, Letter of Continuity, Letter of Trust Receipt and Letter of Hypothecation of goods on 22.7.1981.

  13. The defendant No. 1 sold the goods and failed and neglected to pay the applicant the sale proceeds as agreed, so thereby committed the breach of trust. On 23.2.1983, the defendant No. 1 executed the following documents in respect of the trust receipt amount, i.e. Demand Promissory Note, Letter of Interest, Letter of Continuity, Trust Receipt and Guarantee by the defendant No. 2, and lastly on 1.7.2003, the balance was confirmed by the defendants to the extent of Rs. 20,39,553.84 ps. by letter dated 1.7.1983.

  14. Under the Funded Term Loan of Rs. 6,46,000/-, the necessary documents were executed by the defendants on 23.9.1983, that are Agreement, Letter of Hypothecation, Letter of Interest, and Guarantee by the defendant Nos. 2 and 3 for the repayment. There is balance confirmation on 1.7.1983 to the extent of Rs. 6,62,629.65 ps.

  15. In September 1983, Cash Credit Facility to the extent of Rs. 17,000/-...

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