O.A. No. 277 of 2001. Case: Central Bank of India Vs Raindrop Equipments (India) Ltd. and Ors.. Nagpur Debt Recovery Tribunals
| Case Number | O.A. No. 277 of 2001 |
| Counsel | For Appellant: V.M. Vyawahare, Adv. and For Respondents: B.J. Agrawal, Adv. for Defendant No. 4 and Bhattad, Adv. for Defendant No. 6 |
| Judges | K.J. Paratwar, Presiding Officer |
| Issue | State Financial Corporation Act, 1951 - Section 29; Contract Act - Section 141 |
| Citation | II (2005) BC 95 |
| Judgement Date | January 07, 2005 |
| Court | Nagpur Debt Recovery Tribunals |
Judgment:
K.J. Paratwar, Presiding Officer
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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.
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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.
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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,
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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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The defendant Nos. 1 to 3 and 5 did not appear though served. Defendant No. 4 in written statement at Exh. 46 has denied the liability. The contentions in each para are merely denied. But, the defendant has not denied the grant and availment/enhancement of cash credit facilities. The defendant has not made any commend about the averments in para 11 of the O.A. which recites that the possession of the hypothecation of the goods was taken in July, 1992. This defendant has contended that the Bank authorities did not take arty step of selling the hypothecated goods in its possession. It made prayer for appointment of receiver even while the goods were in its possession. Due to lapse of time, the stock lost its value. The applicant Bank is, therefore, bound to give credit to the value of their stocks. This defendant has prayed for dismissal of O.A. on the above grounds.
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