KISHOR K. MEHTA Vs. RECOVERY OFFICER

JUDGEMENT

(1.) The Petitioners are the directors of one Beautiful Diamonds Company Limited. The Company availed of loan facility from Respondent No.2 " Bank. The Petitioners are also the guarantors. On 26/10/2004, the Debt Recovery Tribunal, on an application filed by Respondent No.2 - Bank, held the Petitioners jointly and severally liable to pay the outstanding loan amount due to Respondent - Bank. A recovery certificate was issued against the Petitioners on 30/11/2004 for Rs.147451929.35. The Respondent No. 1 - Recovery Officer, by the impugned order dtd. 5/2/2020, directed the arrest of the Petitioners, attachment of their bank accounts and placed restrictions on their travelling abroad. Challenging this order, the Petitioners are before us.

(2.) The Respondent No.2 - Bank had filed Original Application No.146/2002 in the Debts Recovery Tribunal (DRT), Mumbai, on 4/4/2002 for recovery of Rs.147451929.00 with interest at the rate of 16% against M/s. Beautiful Diamonds Limited, the borrower company of which the Petitioners were directors and guarantors. In the year 1995, a consortium of banks, including the Respondent- Bank, had sanctioned a pre-shipment facility (packing credit) to the extent of Rs.5400.00 lakh and a post-shipment facility of Rs.8100.00 lakh. Out of these facilities, the Respondent- Bank had advanced Rs.270.00 lakh and Rs.405.00 lakh, respectively. M/s. Beautiful Diamonds Limited (the Company) had executed a Demand Promissory Note and Letter of Indemnity. The Petitioners had given a letter of continuing guarantee. The Company had also created equitable mortgage by deposit of title deeds with the Consortium of the properties consisting of Galas, including fixed plant and machinery. In view of the default on the part of the Company to repay the amount, the Respondent-Bank filed Original Application No.146/2002 in DRT-2, Mumbai. The DRT allowed the original application against the Company and the Petitioners, directing them to jointly and severally pay the amount of Rs.1474514929.00 with interest at the rate of 16% from the date of filing of the original application till full realization. It was declared that the outstandings were secured by mortgage of the Company's properties including Galas with fixed plant and machinery situated at Goregaon, Mumbai and that the charge of the outstanding amount specified in the order was also created.

(3.) The Respondent- Bank applied for a recovery certificate, which was issued against the Petitioners on 30/11/2004 for the amount of Rs.1474514929.00 with interest at the rate of 16%. The DRT directed that the Recovery Officer shall realize the amount as per the certificate in the manner and mode prescribed under Sec. 25 and 28 of the Recovery of Debts and Bankruptcy Act, 1993 (the Act of 1993). The demand notice was issued in the Recovery Proceeding No.709/2004 on 7/12/2005.