ZAZMAN EXPORTS AND OTHERS Vs. CANARA BANK

JUDGEMENT

(1.) This appeal has been filed against the judgment and order dated 28.5.2011 passed by Additional Civil Judge (Senior Division) Court No.2, Kanpur Nagar in Original Suit No. 312 of 2010 whereby the application of the defendant-Bank under Order VII Rule 11 of the Code of Civil Procedure has been allowed and the plaint filed by the appellant-plaintiffs has been rejected.

(2.) The facts of the case as borne out from the plaint are that the appellant-plaintiffs had availed financial assistance from the defendant-Bank which was in the form of cash credit limits and loans. The entire credit facility, which was for an amount of several crores, was taken by the plaintiffs in the year 1998. For availing such facility, the plaintiffs had mortgaged five properties being:

(3.) Admittedly there was default in payment of loans and sometime in the month of December, 2006, out of four accounts of plaintiff-appellant no.1, the defendant-Bank classified a part of one account as non-performing asset (NPA). Two other accounts of the plaintiffs were declared as NPA in March, 2008. Thereafter, on 27.8.2009 the defendant-Bank issued a notice under section 13(2) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short referred to as the 'Act of 2002') determining the liability of the plaintiff no.1 for an amount of Rs. 29,72,97,099.05 paise and that of plaintiff no.2 for an amount of Rs. 7,97,69,724.20 paise, to which a reply was submitted by the plaintiffs on 28.10.2009. It is also stated in the plaint that on 23.4.2009 a proposal for one-time-settlement (OTS) was given by the plaintiffs and a revised OTS proposal was again given on 4.9.2009. It is also stated in the plaint that the properties shown at serial no. (iv) and (v) which were mortgaged with the bank, were agricultural properties and hence no security interest could be created on the said properties by virtue of the provisions of section 31(i) of the Act of 2002. It has also been stated that the property shown at serial no. (iii) was leased land of the Cantonment Board and hence no security interest could be created on the same also. The plaintiffs thus filed the suit with the following reliefs:-