O.A. No. 252 of 2001. Case: Industrial Development Bank of India Ltd. and Ors. Vs Sathavahana Cotton Growers Co-operative Spinning Mills Ltd. and Anr.. Mumbai Debt Recovery Tribunals
| Case Number | O.A. No. 252 of 2001 |
| Counsel | For Appellant: D.P. Desai and Vandana Tiwari, Advs., i/b., M. Dhruv & Co. and For Respondents: P.K. Subbarao, Adv., i/b., Mable & Asso. |
| Judges | K.J. Paratwar, Presiding Officer |
| Issue | Andhra Pradesh Co-operative Societies Act, 1964 - Section 126; Civil Procedure Code (CPC) - Section 80 |
| Citation | IV (2005) BC 74 |
| Judgement Date | February 10, 2005 |
| Court | Mumbai Debt Recovery Tribunals |
Judgment:
K.J. Paratwar, Presiding Officer
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The three Financial Institutions have joined in this O.A. for recovery of their outstandings as below:
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Applicant No. 1: Rs. 2,37,26,453/- with interest at the contractual rate from the date of filing the Original Application till full realization;
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Applicant No. 2: Rs. 1,02,69,326/- with interest as above;
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Applicant No. 3: Rs. 1,49,45,341/- with interest as above.
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The defendant No. 1 approached the applicant No. 1 for financial assistance for setting up the Textile Mill who (Applicant No. 1) by letter dated 1.4.1982 conveyed its in-principle sanction of Term Loan for the sum of Rs. 268 lacs under the Project Finance Participation Certificate Scheme in participation with applicant Nos. 2 & 3. The Term Loan was to be funded as below:
(1) Applicant No. 1 (IDBI) Rs. 138 lacs.
(2) Applicant No. 2 (IFCI) Rs. 65 lacs.
(3) Applicant No. 3 (ICICI) Rs. 65 lacs.
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In consideration thereof, the defendant No. 1 executed Term Loan Agreement on 7.9.1982 and also of Agreement of Hypothecation on even date. The defendant No. 2 by Deed of Guarantee dated 30.7.1982 guaranteed the repayment. In order to further secure the loan, Mr. M.K. Chowdhary, Director of defendant No. 1 attended the branch office of the defendant No. 1 and deposited title deed of its property with intent to create security by way of mortgage. The applicants disbursed the entire loan between 23.9.1982 and 19.8.1985 which was repayable in 16 half yearly instalments. While defendant No. 1 paid 8 instalments aggregating to Rs. 1.32 lacs on the defendant No. 1 's request, the applicants rescheduled the repayment of remaining instalments by letter dated 25.5.1988. The applicants have contended that in spite of the above, the defendant No. 1 failed and neglected to pay the amounts. Therefore, by notice dated 15.3.1990 the outstandings were recalled. As the defendant No. 1 failed and neglected to pay the dues, the applicants issued notice dated 17.9.1992 under Section 126 of the Andhra Pradesh Co-operative Societies Act, 1964 but without any avail. The applicants eventually gave notice dated 13.3.1992 under Section 80 of C.P.C. to defendant No. 2. The payments did not come forward even from the defendant No. 2 thereby necessiting filing of this Original Application.
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In their common Written Statement (Exh. 9), the defendants have admitted the availment of the loan by the applicants. They have also admitted that defendant No. 2 stood as guarantor. The execution of necessary securing documents/Letter of Guarantee is also undenied. The creation of mortgage is also admitted. The defendants have set out the facts and circumstances in which the defendant No. 1 came to be established with cost of Rs. 540.12 lacs including funding by (i) Government of Andhra Pradesh Rs. 149 lacs, (ii) Government of India Rs. 75 lacs, (iii) Individuals, Societies, etc. 28.12 lacs, (iv) Interest Free Loan from A.P. Government Rs. 10 lacs, and (v) Subsidy by the Government Rs. 10 lacs. In addition, the Government of Andhra Pradesh in or about 22.3.1993 invested further amount of Rs. 5.20 lacs as Share Capital. The defendants have taken objection to the 3 applicants filed one Original Application.
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The commercial production of defendant No. 1 began from 1.9.1982. The Mill was manufacturing Cotton Yarn of 1.50 lac kgs. per month around valuing Rs. 13.50 crores. It has 691 employees including 500 Sri Lanka/Burma Repatriates. The monthly expenditure towards wages, salaries, power bills, establishment charges, interest and insurance and others was Rs. 40 lacs. The defendants have also admitted...
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