Appeal No. 111 of 2014. Case: Kandhari Rubber Ltd. and Ors. Vs State Bank of India and Ors.. High Court of Bombay (India)
| Case Number | Appeal No. 111 of 2014 |
| Counsel | For Appellant: Sanjeev Sagar, Advocate and For Respondents: Bhim Sain Jain representing Sanjiv Kakra, Advocates |
| Judges | Ranjit Singh, J. (Chairperson) |
| Issue | Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 - Sections 13(4); Sick Industrial Companies (special Provisions) Act, 1985 - Sections 13(4), 15, 15(1), 16, 17, 22, 22(1), 22(5), 25 |
| Citation | 2015 (IV) BC 97 (DRAT) |
| Judgement Date | March 27, 2015 |
| Court | High Court of Bombay (India) |
Judgment:
Ranjit Singh, J. (Chairperson)
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The O.A. filed by the Bank stands allowed holding the Bank entitled to recover a sum of Rs. 4,55,54,868/- with simple interest @15% p.a. from 20.12.2006 onwards until recovery. The appellants (defendants 1, 2 and 4) and one Mr. Jagdish Kandhari (respondent No. 2) has been held jointly and severally liable for the payment of this amount to the Bank. The Bank has been further held entitled to due share on sale of the property owned by appellant No. 1, on which the Bank has second charge, after satisfaction of claim of IDBI, IFCI and ICICI (defendants 5, 6 and 7). Aggrieved against this order, the three appellants have filed this appeal where one of the CDs has been impleaded as respondent apart from State Bank of India and three others FI who had first charge over the property of appellant No. 1. The respondent State Bank of India had granted overall limit of Rs. 292 lac to appellant No. 1 on execution of necessary documents on 28.7.1995. Appellant No. 2 and respondent No. 2 executed deed of guarantee. Appellant No. 1 company availed the credit facilities and acknowledged their liability through confirmation letter dated 12.4.1996 confirming a balance of Rs. 52 lacs and 97,03,715.68 as on 30.3.1996 in the Cash Credit account. Defendant also confirmed the balance of Rs. 99,94,000/- approx on 31.3.1998. The overall limit of Rs. 292 lac was enhanced to Rs. 400 lacs and security documents in this regard were executed on 21.5.1997. Appellant No. 2 and respondent No. 2 executed guarantee deeds. The overall limit was subsequently reduced to Rs. 300 lac. Thus, the fund based Cash Credit limit was Rs. 150 lac and Ad-hoc Cash Credit (Hypothecation) limit was Rs. 25 lac with EPC of Rs. 50 lac. Non-fund based Letter of Credit limit was Rs. 50 lac and Bank Guarantee limit was of Rs. 25 lac. For these limits, the borrower, as well as appellant No. 2 and respondent No. 2 as guarantors, executed various documents on 31.8.2001. The appellant company had agreed to the interest @ 3.50% above SBAR with minimum of 15% p.a. with monthly rests. Appellant No. 3 deposited title deed of their property C-155, Mewar Industrial Area, Udaipur (Rajasthan) on 21.8.2011 to secure the repayment of outstanding amount granted to appellant No. 1 company. Respondent IFCI had confirmed the second charge of the respondent State Bank of India on 25.3.1996 over land measuring 6 bighas 12 biswas in Khasra No. 398 and 399 at Sukher Industrial Area, Udaipur, Rajasthan.
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The appellants became irregular in the repayment. The respondent State Bank of India issued a demand notice on 10.6.2002 to all the three appellants and respondent No. 2 for paying the outstanding amounts. The appellants failed to liquidate the dues. The company otherwise had acknowledged the liability in a duly audited balance sheet as on 31.3.2005, 29.3.2005, 8 4.2005, 22.11.2005, 9.2.2006, 20.2.2006, 31.3.2006, 17.7.2006, 22.8.2006. A sum of Rs. 2,47,17,617.54 was due besides interest from 1.11.2002 in the Cash Credit (Hypothecation) as per the books of account maintained by the Bank. A sum of Rs. 2,18,005/- was deposited by the company on 31.3.2006 leaving a balance of Rs. 2,44,99,612.59. The appellants being liable to pay this amount with interest @ 15% p.a. from 1.11.2002 with monthly rests, a sum of Rs. 2,10,55,256/- had accrued as interest and in this manner a total sum of Rs. 4,55,54,868.54 was claimed.
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Appellant No. 1 company had made a reference to BIFR under Section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 (for short, SIC A) and this reference was registered on 15.1.2002. The reference was rejected on 10.10.2006. Claiming that period from 31.3.2001 to 10.10.2006 was required to be excluded while computing limitation in terms of Section 22(5) of SICA, the Bank had filed the O.A. in the year 2006.
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The appellants and respondent No. 2 had filed a joint written statement. As per the appellants, the setting up of the project was started in 1988 and completed in 1991. The cost of the project was advanced by respondents 3 to 5 Banks/financial institutions. The financial institution had further purchased shares of the appellant company for Rs. 100 lac. The respondent State Bank of India was to provide Working Capital. Till March 1990, the financial institution disbursed Rs. 305 lac for which the company purchased plant and machinery. The company started operation and the balance amount of Rs. 95 lac out of the committed amount was with respondent...
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