ALLIED EQUIPMENT AND SERVICES Vs. DEBT RECOVERY TRIBUNAL

JUDGEMENT

(1.) These two petitions filed under Article 227 of the Constitution of India have impugned the orders of Debt Recovery Tribunal passed in Original Applications No. 547/1997 and 550/1997, both dated 8.6.1999 by which the claim of the applicant (respondent no.2 herein) has been accepted and the petitioner were directed to pay money and the recovery certificates have been drawn and issued in terms of the orders. Except the amount claimed which is different in two cases, other questions of facts and the law involved in them are common. They are, therefore, being disposed of by this common order. The parties"and the facts related in the order will be as they are applicable in Civil Miscellaneous (Main) No. 719/1999, but the judgment will govern the decision in both the cases. C.M.(M) No. 719/1999 has been filed to assail the order of the Debt Recovery Tribunal dated 8.6.1999 by which in OA No. 547/1997 filed by the respondent no.2-Indian Bank against the petitioners an order directing the petitioner to pay a sum of Rs.6,35,03,215/-- alongwith pendente lite and future interest @ 20.75% "per annum from the date of the filing of the application till the date of its realisation alongwith the cost of the suit was made against the petitioners. The petitioners were held liable to pay the' aforesaid amount Jointly and severely within four weeks from the order. A recovery certificate was also' issued in terms of this order.

(2.) CM (M) No. 720/1999 on the application of the respondent no.2-Indian Bank, bearing no. 550/1997, the Debt Recovery Tribunal by order dated 6.9.1999, ordered the petitioners to pay a sum of Rs. I,55,14,476.00 alongwith pendente lite future interest @ 20.75% p.a. from the date of filing of the application till the date of its realisation and the cost of the petition against the appellant. The appellants were held liable to pay the aforesaid amount jointly and severely within four weeks from the date of the receipt of the order. A recovery certificate was issued in terms of this order.

(3.) In the application filed by respondent-Bank against the petitioners in CM (M) No. 547/1997, the allegations were that in May, 1992 , the appellant no.1 M/s. Allied Equipment & Services approached the bank for advance of Rs.2 crores for the purpose of promoting its business activities. The bank arranged for inter corporate deposit of Rs. 2 crores between May, 1992 to August, 1992 which the petitioner no.1 undertook to repay'alongwith interest accrued thereon on the due dates. On this promise, the bank agreed to repay the amount of inter corporate deposit alongwith interest to the Public Sector Undertaking/Corporation from which the said deposits were arranged. The petitioner no.1 faulted in making the payment on due date, therefore, the respondent-Bank had to discharge its obligation and make the payment to the public sector undertaking/corporation. The petitioners thereafter requested the bank to arrange the fresh inter corporate deposits for the petitioner no.l or get the said inter "corporate deposit rolled over. On 31.5.1993, the respondent-bank further rolled over such inter corporate deposit alongwith interest added thereto. The petitioner no.1 still failed to make the payment of the outstanding debts. The bank debited the account of the petitioner no.l with Ps.2,50,52,910/~ on 28.6.1993. Since the amount was not paid , this sum was added to the debit account of the petitioner company. It was further submitted in the application that in order to secure the facility, the petitioners executed the necessary loan documents, particulars of which were mentioned in para 5 of the application. This facility was further secured by personal guarantee of the petitioner nos. 2 and 3 by executing the agreement dated 21.1.1993 under which they undertook to secure the liability of the respondent bank to the extent of Rs.2 crores. These petitioners, therefore, were jointly and severally liable to pay the amount due from the petitioner no.1. Defendant no.4 M/s Shashi Prabha Mittal (not party to these petitions) also pledged 10,000 shares of M/s. Rossell Industries Ltd., stood in her name. She agreed to the terma*and conditions of the loan. She also become liable to the extent of the share pledged by her. Besides, the appellants were also pledged 60,000 shares to M/s. Rossell Industries Ltd., as security with the respondent bank for the loan advanced, details of which was mentioned in the para 5 of the application. In Addition, 18,000 equity shares of Rossell Industries Ltd., were also allotted in the name of the respondent-bank in terms of the scheme of arrangement between M/s. Rossell Industries Ltd., and M/s. Rossell T. Ltd., which was held as security against the loan, but the value of these shares was insignificant to the loan given to the petitioner. The petitioner failed to fulfil their commitment for the payment of 100 on due date. Therefore, the account of petitioner no.1 was debited time and again and the amount shown as outstanding is liable to be recovered from the petitioners. The notice of demand was served on the petitioners who failed to comply with it and clear the debt. This led to the filing of this petition for recovery for a sum of Rs. 6,35,03,215.00 with interest @ 20.75% p.a. from the date of the filing off the application till the date of its realisation.