Interim Application No. 414 of 2004 in Original Application No. 178 of 2004. Case: Karur Vysya Bank Ltd. Vs Annai Mookambikai Roller Flour Mills Pvt. Ltd. and Ors.. Chennai Debt Recovery Tribunals

Case Number:Interim Application No. 414 of 2004 in Original Application No. 178 of 2004
Party Name:Karur Vysya Bank Ltd. Vs Annai Mookambikai Roller Flour Mills Pvt. Ltd. and Ors.
Judges:Harihar P. Chaturvedi, Presiding Officer
Issue:Recovery of Debts Due To Banks And Financial Institutions Act, 1993 - Sections 19(12), 19(18)
Judgement Date:May 17, 2005
Court:Chennai Debt Recovery Tribunals
 
FREE EXCERPT

Judgment:

Harihar P. Chaturvedi, Presiding Officer

  1. By this application, the petitioner bank has sought the following prayer that this Tribunal may be pleased to

    1. appoint a receiver to manage the theatre complex belonging to the respondent No. 2/defendant No. 2 situated at No. 3, Pillar Road, Ashok Nagar, Chennai consisting of land and theatre buildings namely, Udayam, Suriyan, Chandran and Mini Udayam and the Kalyana Mandapam-Udayam Kalyana Mandapam standing in the name of Aruna Theatres & Enterprises Pvt. Ltd. and more fully described in the schedule hereunder and to collect the income and appropriate the proceeds to the credit of the respondent No. 1/defendant No. 1 pending disposal of the Original Application No. 178/04 on the file of the D.R.T.-I, Chennai;

    2. pass such further or other orders as this Hon'ble Tribunal may deem fit and proper in the circumstances of the case and thus to render justice.

    SCHEDULE

    All the piece of land and building property situated at No. 3, Pillar Road, Ashok Nagar, Chennai consisting of land and theatre buildings namely, Udayam, Suriyan, Chandran and Mini Udayam and the Kalyana Mandapam-Udayam Kalyana Mandapam standing in the name of Aruna Theatres & Enterprises Pvt. Ltd. with an extent of 23 grounds and 1930 sq. ft. or 57, 130 sq.ft. situated at T.S. No. 2, Park Block No. 71, Kodambakkam Village, Door No. 3, Pillar Road, Ashok Nagar, Chennai situated in the sanctioned plan of Ashok Nagar Scheme, site for cinema theatre and measuring 23 grounds 1390 sq.ft. and thereabouts bounded as follows:

    NORTH BY: 120' Pillar Road

    SOUTH BY: Row Type MIG Houses

    EAST BY: Site for Restaurant and

    WEST BY: 120' Road and having restaurant

    With Linear measurements

    NORTH BY: 195'

    SOUTH BY: 300'

    EAST BY: 160'

    WEST BY: 280'

    It is the contention of the petitioner bank for seeking such interim relief that the applicant bank has filed the present Original Application claim against the defendants including the defendant No. 2 (the respondent No. 2 in the present IA) for the recovery of Rs. 12,53,77,604.56p. (Rupees twelve crores fifty-three lacs, seventy-seven thousand six hundred four and paise fifty-six only) on 27th May, 2004. It is further contended by the bank that the first respondent, Annai Mookambikai Roller Flour Mills Pvt. Ltd. was granted various credit facilities through its Kodambakkam Branch in the year 1998 for the which the second respondent Aruna Theatres & Enterprises Pvt. Ltd. stood as a corporate guarantor to secure the repayment of the credit facilities (with interest thereon) availed by the first respondent Annai Mookambikai Roller Flour Mills Pvt. Ltd. It is further submitted that the second respondent Aruna Theatres & Enterprises Pvt. Ltd. had executed a letter of corporate guarantee on 12th October, 1998 in favour of the applicant bank so as to stand as a guarantor for the financial assistance of principal loan amount of Rs. 759.68 lacs under above stated various loan facilities. In order to secure the loan, the guarantor (the second respondent/second defendant) has also created an equitable mortgage by deposit of title deeds relating to its respective properties, which is situated at No. 106, Alinjivakkam Village, Ponneri Taluk, Thiruvallur district and further No. 3, Pillar Road, Ashok Nagar, Chennai consisting of land and theatre buildings namely, Udayam, Suriyan, Chandran and Mini Udayam and the Kalyana Mandapam-Udayam Kalyana Mandapam standing in the name of Aruna Theatres & Enterprises Pvt. Ltd. more fully described in the schedule of the IA.

  2. The petitioner bank has further alleged that the defendant has violated the terms and conditions of the sanction of the loan and failed to maintain adequate stock properly at any point of time and their operation in the cash credit open loan account was not proper. The applicant bank officer went for inspection of the stock to be maintained by the first defendant but found that almost there was no stocks to be maintained by the first defendant but found that almost there was no stocks and whenever enquired about the depletion of stocks, the directors of the defendant No. 1 company used to tell only that they have sold the stock on credit basis but have yet to receive the proceeds thereof. Thus, the stock position of the flour mill got completely depleted and later on there was absolutely no stock, which clearly proves that there was some mala fide intention on the part of the defendants for avoiding repayment of the loan. Thus, their account became a non-performing asset. When the bank made its efforts to pursue the defendants for making repayment of the loan, it became only a futile exercise as evasive replies were given by the defendants with false hope that the loan account would be settled through selling of the schedule mentioned properties of the defendants. None of the assurances or promises made by them were materialized or honored. It is further represented by the bank that the operation and functioning of the defendant company came into a complete halt and presently the defendant No. 1 company is not operating and no remittance is being sent by the defendant No. 1 company, which accumulated to the present Original Application claim. The bank has further alleged that the defendant No. 2 has stood as a corporate guarantor to the loan liability of the defendant No. 1 and is bound to clear the outstanding against the defendant No. 1 company but it did not care to clear the said outstanding while the defendant Nos. 1 and 2 are family business concerns, the shareholders of the respondent No. 1 and respondent No. 2 are common. The respondent No. 2 is running a theatre complex and Kalyana Mandapam profitably and making huge profits by exhibition of cinema movies, rental income from the shops, canteen, etc. and also by letting out the Kalyana Mandapam on rent basis. The bank further requested the defendants to remit payment from the income derived by the defendant No. 2 so that the loan liability of the defendant No. 1 company could be reduced to a greater extent but the defendant No. 2 having enough means to clear the loan liability due to the applicant bank failed to repay the installments with mala fide intentions to evade the repayment of the outstanding loan while the respondents are having various other sources of income besides the income from the above stated properties, which is sought to be attached and to be administered by a receiver. It is further contended that if this prayer is not allowed, the defendants will take away the income derived out of the above said theatres, which are hypothecated to and equitably mortgaged with the bank and the petitioner bank would be put to irreparable loss and it would not be able to recover the money due from the respondent/defendants. Hence, this Court may pass an appropriate order as prayed for and to appoint a receiver for management of the above said theatre complex and for recovery of the amount due to the bank.

  3. In the present matter, the respondent Nos. 1 and 3 have filed their counter and in principle they have conceded with the prayer made by' the petitioner bank and submitted that an official receiver may be appointed to administer the respondent No. 2 company with the sole object of discharging the debt due to the applicant bank and also to see the welfare of the company as well as its shareholders. They have further stated that the balance of convenience is in granting such relief in favour of the applicant bank and no prejudice would be caused to the respondent No. 2 if such appointment of receiver is made by the Court and it would be substantial for the company and its shareholders and to secure the ends of justice.

  4. Contrary to this, defendant/respondent Nos. 2 and 4, 6, 8 and 14 to 17 have filed a separate counter/subsequent counter through their advocate Mr. K. Sukumaran and opposed the prayer made by the bank and further alleged that the bank has colluded with rival directors of the defendant No. 2 company and wants to exploit this situation for appointment of a receiver, while the defendant No. 2 company is performing well and sincere enough for its contractual obligation and there exists no such condition warranting the appointment of a receiver/administrator under Sec. 19(12) and 19(18) of the Act and such relief can be granted and power can be invoked by the Court for...

To continue reading

REQUEST YOUR TRIAL