O.A. No. 808 of 2001. Case: Development Credit Bank Ltd. Vs Parth Shares and Stock Broking Pvt. Ltd. and Ors.. Mumbai Debt Recovery Tribunals

Case NumberO.A. No. 808 of 2001
CounselFor Appellant: Uma Fadia, Adv. and For Respondents: Rajesh Nagori, Adv., i/b., Sunil Humbre, Adv. and For Official Liquidator: Palav, Adv.
JudgesK.J. Paratwar, Presiding Officer
IssueBanking Law
CitationII (2006) BC 131
Judgement DateJanuary 19, 2006
CourtMumbai Debt Recovery Tribunals


K.J. Paratwar, Presiding Officer

  1. The borrower (now in liquidation)-defendant No. 1 referred to as the borrower/defendant No. 1 and the guarantors (defendant Nos. 2 to 5) are sued in this original application for recovery of Rs. 1,34,869.47 with interest @ 18% p.a. with quarterly rests from the date of filing the original application till full realization.

  2. The amounts were sought to be recovered by liquidating pledged (by defendant No. 1) shares as mentioned in the schedule marked as Exh. 'C6'. During the pendency of the original application, however, the applicant has sold not only said shares but other shares (which though were pledged were not disclosed by the Bank) for Rs. 53,15,309.60. The applicant's claim thus has stood reduced by said amount.

  3. The applicant's case is that on or about 4.5.2000, it had sanctioned cash credit limit of Rs. one crore to the defendant No. 1 against pledge of certain shares and personal guarantee by defendant Nos. 2 to 5. The borrower executed usual security documents. The guarantor gave letter of guarantee. The borrower availed of the facility but did not operate the account satisfactorily. The payment was not made despite repeated demands and the notice thereby necessiting filing of this application for recovering the dues.

  4. The official liquidator in written statement (Exh. 43) has understandably pleaded ignorance about the averments in the original application about the facts. The usual statements are made by the official liquidator which are not required to be stated here.

  5. The defendant No. 2 in his written statements at Exhs. 33 and 85 have denied albeit formally to have stood as guarantor. The grant of the cash credit facility against the pledge of shares by the applicant to defendant No. 2 however is admitted. The defendant has contended that shares in excess of what have been shown by the applicant were pledged which fact, as said earlier, is eventually admitted by the Bank. It is contended that defendant had time and again requested the applicant to sell the pledged shares proceeds of which would have not only cleared the outstandings but left sumptuous surplus. The applicant however failed in paying any heed to this request. The original application is sought to be dismissed on said grounds.

  6. The parties have let in evidence through affidavits and documents in support of their case and for refuting each other's case. The applicant relies on claim affidavit of Mr. Ismail...

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