T.A. No. 88 of 2002-DRT-III. Case: United Commercial Bank Vs Premier Oils Limited and Ors.. Kolkatta Debt Recovery Tribunals

Case NumberT.A. No. 88 of 2002-DRT-III
CounselFor Appellant: Sanjukta Roy, Adv. and For Respondents: None
JudgesD.C. Thakur, Presiding Officer
IssueRecovery of Debts due to Banks and Financial Institution Act, 1993 - Sections 17, 19 (24) and 26(2); Debts Recovery Tribunal (Procedure) Rules, 1993 - Rule 12(7)
CitationIII (2004) BC 191
Judgement DateApril 10, 2003
CourtKolkatta Debt Recovery Tribunals


D.C. Thakur, Presiding Officer

  1. The applicant Bank did institute Suit No. 1157 of 1987 before the Hon'ble High Court at Calcutta at its Ordinary Original Civil Jurisdiction by way of presenting one plaint in connection therewith which was in fact accompanied by the eighteen exhibits. The date of presentation of the plaint in connection with the above suit was November 27, 1987. The applicant Bank did institute the said suit against the four defendants for the purpose of recovery of an amount not less than Rs. 39,32,248.62 p. inclusive of interest and also for interest from October 1, 1987 till filing of the suit, interim interest and interest on judgment at 16.5% per annum. Out of such four impleaded defendants, the defendant No. 1 is a Company incorporated under the Companies Act, 1956 and is also engaged in carrying on business as the manufacturer and processor or a dealer in oil and oil seeds. The said defendant No. 1 was enjoying several credit facilities from the Burra Bazaar Branch of the applicant Bank which were a cash credit (hypothecation account) being Purchase Account, Cash Credit (book debts) and a frozen term loan account.

  2. From point of time, the day like December 4, 1973 is the starting point of enjoyment and availing by the first defendant of the credit facilities with the applicant Bank which are of the maximum limit or Rs. 10 lakhs (Rupees Ten lakhs) on terms and conditions contained in a set of Banking documents dated December 4, 1973 executed "by and/or on behalf of the first defendant". The enjoyment of the above credit facilities would be evidenced, if one considers minutely the Exhibits '1' and '2' of the evidence-on-affidavit filed on May 26, 2000 by Mr. D. Balakrishnan, the Deputy Chief Officer (Inspection & Vigilance Department), Zonal Office, Mumbai. The Exhibit '1' being the balance confirmation confirmed on April 20, 1974 has been meant for an amount of Rs. 6,28,110.29 p. The said balance confirmation was meant by and on behalf of the said defendant company in the form of Rs. 1 lakh (Rupees one lakh) dated the above day and date after being addressed to the Manager, Burra Bazaar Branch of the United Commercial Bank.

  3. Apart from the above, the 'Exhibit 2' is also a letter written on March 25, 1977 confirming as well as accepting the correctness of the amount which is no less than Rs. 7,44,283.95 p. The said letter in the form of balance confirmation was written to the said Manager of the Burra Bazaar Branch. The said defendant company wanted to continue the availment of the accepted, admitted credit facilities which were constantly being provided by the applicant Bank; and for such purpose the said defendant forwarded a set of Banking documents duly executed by itself on March 25, 1977 along with a letter written on 11th May, 1977.

    (a) Demand Promissory Note for Rs. 10 lakhs;

    (b) Letter of Waiver; (c) Letter of continuity;

    (d) Agreement of hypothecation of goods;

    (e) Agreement for bill purchase;

    (f) Extract of the resolution of the meeting of the Board of Directors held at the Registrar Office being situated at No. 4 Synagogue Street, Kolkata-700001, of itself and in which the defendant Nos. 2, 3 and 4 attended; and

    (g) One letter of joint guarantee executed on March 25, 1977 were the documents falling under the category of the Banking documents sent to the applicant Bank by the said defendant company.

  4. The third phase of continuation of the availment by the defendant No. 1 of the credit facilities can be witnessed, if one takes into consideration the further execution of the following four documents, namely--

    (i) One Demand Promissory Note for Rs. 10 lakhs;

    (ii) Letter of Waiver;

    (iii) Letter of Continuity; and

    (iv) agreement for hypothecation of goods which was in fact caused to be done by the said Company on April 17, 1979.

    Truly speaking, the defendant company has been found to have availed itself of the facilities arising out of the commercial contract as above, but it has also been found miserably failing to operate the said accounts in respect of which those facilities were granted. Both from sub-paragraphs (c) and (d), paragraph 7 or the plaint presented on November 27, 1987 as well as paragraph 9 of the evidence-on-affidavit affirmed by Mr. D. Balakrishnan, Deputy Chief Officer (Inspection and Vigilance Department), it shall appear that on the request or the defendant, the regular operation to the extent of Rs. 7.50 lakhs in the cash credit (hypothecation account) was transferred to the cash term loan account and the overall limit of cash credit was enhanced from Rs. 10 lakhs (Rupees ten lakhs) to Rs. 20.10 lakhs sanctioned to be availed of by the said defendant No. 1 being proportionately to the extent of Rs. 7.30 lakhs in the cash credit (hypothecation account) Rs. 12.80 lakhs in the bill purchase/cash credit (book debts account).

  5. The said arrangements were made without prejudice to the applicant Bank's existing rights and securities and were not in supersession of any of the Banking documents previously executed by the defendants.

  6. For such purpose, the defendant company executed four documents in connection with cash credit (hypothecation account) whereas it executed agreement for bill purchase in respect of bill purchase through cash credit (book debt accounts).

  7. The above three types of accounts were found to have been confirmed by the said defendants on several days and dates. At least there was found an amount of Rs. 39,32,248.52 p. being due and lawfully recoverable from the defendants. The said amount to take within its fold the interest agreeably charged on the amount disbursed as well such sanctioned amount was ascertained on September 30, 1987. After that amount had been classified as the 'NPA', in connection with the Cash Credit Account maintained by the defendant company, the applicant Bank started to issue the demand notices not only upon the defendant No. 1 but also on the other defendants for the recovery of the said amount lawfully declared to be due and recoverable jointly or severally from those defendants. But the said notices issued upon the defendant company and other related persons brought no fruitful result to the applicant Bank, notwithstanding the bounden registration of the charges created in favour of the Bank by the said company with the Registrar of Companies, Eastern India under the relevant legal provisions dealing with the registration of such charges with regard to which the Companies Act, 1956 (Act No. 1 of 1956) has dedicated Part V of itself commencing with Section 124 of itself.

  8. Thereafter came October 27, 1987 when the applicant Bank was compelled to institute one suit bearing No. 1157 of 1987 before the Hon'ble High Court at Kolkata at its original ordinary civil jurisdiction by way of presenting plaint along with eighteen exhibits wherein the applicant Bank did pray as the plaintiff, the following reliefs from the said Hon'ble Court:

    (a) Decree for Rs. 39,32,248.62 p. against the defendants jointly and severally;

    (b) Interest from 1st October, 1987 till filing of the suit, interim interest and interest on judgment at 16.5 per cent per annum;

    (c) Declaration that the suit properties mentioned in Annexure "G" hereof remain hypothecated with the plaintiff as security for payment or the plaintiff's claims herein;

    (d) Decree for sale and realization of the suit properties mentioned in Annexures "G" hereof by public auction or private contract with liberty to the plaintiff to appropriate the net proceeds thereof in pro tanto satisfaction of the plaintiff's claims herein;

    (e) Receiver;

    (f) Injunction

    (g) Attachment;

    (h) Costs;

    (i) Further and other reliefs.

    against those defendants, because at that time there was neither the Recovery of Debts Due to Banks and Financial Institutions Act, 1901 (Act No. 51 of 1993) nor was there any Tribunal to adjudicate any debt to the Banks or Financial Institutions or Consortium of either of them under Section 17 of the said Act.

  9. During the pendency of the said Suit, the defendants filed jointly one written statement on April 30, 1991 before the said Hon'ble Court, Since a written statement has been filed by a participating defendant before a judicial body it has been traditionally described as one to bear the same value like a plaint which is ordinarily presented by a plaintiff for institution of one case of civil nature under Section 26 of the Code of Civil Procedure, 1908, which lays down the following--

    Institution of suits.--Every suit shall be instituted by the presentation of a plaint or in such other manner as may be prescribed.

    Again, Order VIII of the First Schedule to the said Code equally prescribes the duty for the participating defendant to present a written statement of himself either at or before the first hearing or within such time as the Court may permit. The above legal position was dominant in every Court system; being one which existed prior to the enactment of the Code of Civil Procedure (Amendment Act, 2002), (Act No. XXII of 2002) which has come into force with effect from July 1, 2002. Section 9 of the said Amendment Act has caused the substantial amendment or the rule of the said order. The present existing situation may be appearing evident from the language used in the amended Rule 1 of the said order which reads as follows:

    .......Written statement.--The defendant shall, within thirty days from the date of service of summons on him, present a written statement of his defence:

    Provided that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the...

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