Failure to Pay Pro-rata amount against each loan towards Federal Bank due to Negligence: DRAT Directs to pay Amount with interest [Read Order]
The tribunal directed to pay Amount with interest in Pro-rata amount against each loan towards Federal Bank
The Debt Recovery Appellate Tribunal (DRAT) Chennai directed the appellant to pay a sum of Rs.9.03 lakhs each with interest at 6% p.a. (simple) from the date of the order of the OA 1717/1998, i.e., from 11.9.2002 till the date of realization. The decision was on finding that the failure to pay amount against each loan towards Federal Bank due to Negligence.
M. Balasubramaniam and others , the appellants filed appeal under Section 20 of RDB Act, challenging the order dated 11.9.2002 passed by the Presiding Officer, DRT, Ernakulam in OA No.1717/1998.
An application was filed by The Federal Bank Limited, the respondent bank against M/s Teak Tex Processing Complex Ltd and 15 others. After contest, OA was allowed and recovery certificate was ordered to be issued against defendants 1 to 9 for recovery of a sum of Rs.31,195,422.75 less a sum of Rs.37.50 lakhs paid by defendants 2, 4, 5 and 9, with interest on the balance amount at 6% per annum from the date of order till the date of realisation subject to the pari passu charge of Defendants 10 to 16 held over on the schedule mentioned property.
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In the OA, first defendant is a company engaged in the manufacture, processing and export of textile goods and defendants 2 to 9 are its directors and guarantors for the loan availed by the first defendant from the Federal bank, defendants 10 to 16 and SCICI Ltd. There was an understanding between the plaintiff bank and defendants 10 to 16 and the SCICI Ltd. to share on pari passu basis on the security, security charges to be created by the first defendant towards the loan.
First defendant availed a term loan of Rs.2.00 crores and executed loan documents and the loan has to be repaid in 24 quarterly instalments at Rs.8,33,400/- with interest at 17% per annum with quarterly rests. First defendant created a valid mortgage by deposit of original title deeds. Defendants 2 to 9 executed individual guarantee deeds. As per the guarantee executed by defendants 2 to 9, their liability is restricted to Rs.112.50 lakhs.
First defendant defaulted in paying the loan amount. Invoking the personal guarantee of defendants 2 to 9, they were asked to pay the amount. On their failure to pay the dues, OA was filed for recovery of a sum of Rs.3,12,01,168.75p, with interest and costs which got allowed.
When the appeal was heard, Counsel for the appellants submitted that upper limit of the liability of the guarantors was fixed at Rs.112.50 lakhs and it has to be paid on pro-rata basis. The Tribunal held that upper cap of Rs.112.50 lakhs was liable to be paid to all the eight consortium banks.
It is the case of the appellants that appellants settled the dues of all other consortium banks except the respondent bank. Order passed in RA 31/2003 by this Tribunal will also be applicable to this appeal. It is seen from this order that respondent bank is also a party to this appeal. A settlement memo has been filed before DRT on 18.2.2002, stating that the entire matter has been settled so far as the appellants viz. Mr. Palanisamy, N. Chandran and Mr. Jagadish N. Hinduja are concerned.
Since defendant No.3 and defendants 6 to 8 are not parties to the aforesaid compromise, Presiding Officer did not accept the settlement but made a note with regard to the payment of Rs.37.50 lakhs made by defendants 2, 4, 5 and 9. In the light of this background, when the aforesaid appellants paid the amount due to the respondent bank, in RA 31/2003, they were discharged.
Connected appeals, viz., RA 60/2007, RA 97/2008, RA 98/008 were allowed on 17.11.2015 holding that recovery shall be for a sum of Rs.11.25 million, payable pro-rata on the amount advanced by each of the consortium banks, subject to upper cap of Rs.11.25 millions.
Counsel for the respondent bank that there are eight guarantors and they are liable to pay on pro-rata basis at Rs.9.03 lakhs each. In July, 2003, four guarantors paid a sum of Rs.37.50 lakhs. Only three guarantors entered into a compromise. When the appellants offered to pay Rs.9.03 lakhs on 14.8,2019, no positive steps were taken by them for paying this amount.
Counsel for the appellants submitted that reason for not paying the amount immediately was that appeal was dismissed for default and the application filed for restoration was also dismissed for default. Only after the CRP No.1719/2019 was filed and as per the orders passed in the said CRP on 7.9.2022, this appeal was restored to file.
A single bench of Justice G. Chandrasekharan Chairperson ordered the appellants to pay a sum of Rs.9.03 lakhs each with interest at 6% p.a. (simple) from the date of the order of the OA 1717/1998, i.e., from 11.9.2002 till the date of realization.
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