Bangalore District Court
Karnataka State Industrial vs ) M/S.Grapco Industries Ltd on 31 January, 2022
IN THE COURT OF LXXXIX ADDL.CITY CIVIL & SESSIONS
JUDGE, BENGALURU. (CCH-90)
Present: Sri.S.J.Krishna, B.Sc., LL.B.,
LXXXIX Addl.City Civil &
Sessions Judge, Bengaluru.
Dated: 31st JANUARY 2022
Com.Misc.No.68/1998
PETITIONER : Karnataka State Industrial
Investment & Development
Corporation, Ltd.,
Office No:36, "MSIL House,"
Cunningham Road,
BENGALURU 560 052.
(By Mohammed Ahmed Khan,
Advocate)
-Vs-
RESPONDENTS : 1) M/S.Grapco industries Ltd.,
Regd.Office: Plot No.4,
Somanthpur Industrial Area,
Balasore District,
ORISSA.
(By M/s.Khaitan & Co., Advocates)
2) Sri.R.P.Jhun Jhunwala,
S/o Sri.R.K.Jhun Jhunwala,
Major,
Residing at No.2-B,
Hastings Park Road, Alipore,
CALCUTTA-700 017.
(By M/s.Khaitan & Co., Advocates)
/2/
Com.Misc.No.68/1998
3) M/s.Grapco Mining and
Company Limited,
Regd., Office at No.8,
A.J.C. Bose Road,
8th Floor,
CALCUTTA-700 017.
(By M/s.Khaitan & Co., Advocates)
4) M/s.Akash Plaza (P) Ltd.,
Regd., Office at No.7,
Babulal Lane,
CACLCUTTA-700 007.
(Exparte)
5) M/s.Akash Enclave (P) Ltd.,
Regd, Office at No.7,
Babulal Lane,
CALCUTTA-700 007.
(Exparte)
6) M/s.Empee Fiscal Services
Private Limited,
Regd., Office at No.7,
Babulal Lane,
CALCUTTA-700 007.
(Exparte)
7) M/s.Empee Consultants & Viniyog
(P) Ltd.,
Regd., Office at No.7,
Babulal Lane,
CALCUTTA-700 007.
(Exparte)
8) M/s.Empee Resources (P) Ltd.,
Regd.Office: at No.7,
Babulal Lane,
CALCUTTA-700 007.
(Exparte)
/3/
Com.Misc.No.68/1998
9) M/s.Akash Properties (P) Limited,
Regd.Office at No.7,
Babulal Lane,
CALCUTTA-700 007.
(Exparte)
10. M/s.Bank of Rajastan Ltd.,
A Banking Company within the
meaning of Companies Act, 1956,
having its registered office
Clock Tower, Udayapura,
Rajasthan
by its AGM and
Branch Office at Maruti Complex,
325, 5th Main Road,
Gandhinagar,
Bengaluru-560 009.
Now ICICI Bank Limited,
having its registered office
at land mark race course Circle,
Alkapuri, Vadodara.
(By M/s.RSN Associates, Advocates)
11. M/s.Nucent Finance Limited,
Registered Office at
No.10A-06, Ganguly Sarani,
Kolkatta-700 020.
(In view of the memo dated
19.12.2006 filed by The Petitioner
Corporation I.A. to implead
Respondent No:11 was closed.)
Date of Institution of 21.08.1998
petition
Nature of suit : Miscellaneous Petition us 31(1)
(suit on pronote, suit for (aa) of State Financial
/4/
Com.Misc.No.68/1998
declaration and Corporation Act, 1951
possession suit for
injunction, etc.,)
Date of commencement : 20.09.2004
of recording of evidence
Date of judgment : 31.01.2022
Total duration : Year/s Month/s Days
23 05 10
(S.J.KRISHNA)
LXXXIX ADDL.CITY CIVIL &
SESSIONS JUDGE, BENGALURU.
(CCH-90)
JUDGMENT
The Petitioner Corporation has filed this petition under section 31(1)(aa) of State Financial Corporation Act, 1951 praying the Court to
a) Declare a sum of ₹.3,76,39,732-49 is due to the petitioner Corporation as on 31.07.1997 with future interest at 25.50% on the footing of compound interest at quarterly rest basis on the said amount of ₹.3,76,39,732-49 from 01.08.1997 till the entire amount is realized;
b) Declare a sum of ₹.3,76,39,732-49 as on 31.07.1997 is due from the second respondent with future interest at 25.50% on the footing of compound interest at quarterly rest basis under the deed of guarantee /5/ Com.Misc.No.68/1998 dated:23.04.1996;
c) Pass an order that the Respondents No:3 to 9 are jointly and/or severally liable to pay the said sum of ₹.3,76,39,732-00 with future interest at 25.50% p.a. on the footing of compound interest on quarterly rest basis in terms of surety agreement dated:23.04.1996 executed by the third respondent and the surety agreement executed by respondents 4 to 9 on 03.05.1996;
d) pass on order for sale of petition schedule premises as detailed in Schedule A to G have been given as collateral security by respondent No:3 to 9;
e) Confirm the ad-interim order of attachment made under section 32 of the SFC Act;
f) And pass such other orders or grant such other reliefs as are deemed necessary in the circumstances of the case, including the costs of the petition.
The summary of the case of the petitioner is as under:
02. The Petitioner Corporation is a corporation incorporated and established under the provisions of Companies Act, 1956 having its registered Office at cause title mentioned address.
/6/ Com.Misc.No.68/1998
03. The Petitioner Corporation is handling public funds, and is rendering pubic duty while enforcing recovery of the same from beneficiaries. To enable the Petitioner Corporation to effect speedy recovery of the moneys lent and advanced, Government of India by notification published in Gazette Part II sub section (E) dated:21.12.1986 has brought the Petitioner Corporation under the ambit of State Financial Corporations Act in so far as application of Sections 29, 30, 31 and 32 of SFC Act concerned.
04. The first respondent is a company incorporated under the Companies Act under the name and style Grapco Granite Limited as per the registration certificate dated:13.07.1988 issued by the Registrar of Companies, Orissa State.
05. The first respondent has changed its name as M/S.GRAPCO INDUSTRIES LTD., as a result of diversification of its activities and has obtained a fresh certificate under Section 21 of the Companies Act, on 07.12.1994 from the Registrar of Companies, Orissa state.
06. The registered office of the Company is at Plot No: 4, Somaathur Industrial Estate, Balasur District, Orissa state. It has its Corporate Office at Calcutta and factories at Rajasthan and Karnataka also.
/7/ Com.Misc.No.68/1998
07. The authorized share capital of the Company is 60.00 Crores and its paid up capital being ₹.23.35 Crores of which public holdings constitute 56% as per the particulars furnished by the first respondent.
08. The first respondent Company is engaged in the manufacture and export of granite tiles and granite slabs having gag of 100% Export Oriented Unit (100% E.O.U.) As such granite slabs are cut by the instrument made of diamonds. As reported by the first respondent the Company went in production during 1989 at Somanathapura Industrial Estate, Balsore District, Orissa and started exporting its products to various states.
09. The second respondent being a promoter is also managing director of the first respondent.
10. As per the minutes of the VII annual general meeting held on 29.11.1995 at its registered office, the Board of Directors of the Company were authorized under section 293(1)(d) of the Companies Act, 1956 to borrow moneys up to the extent of ₹.250.00 Crores inclusive of moneys already borrowed notwithstanding such sum or sums of moneys exceed paid up capital of the company of its free reserve.
/8/ Com.Misc.No.68/1998
11. The first respondent having set up a granite processing unit in the State of Karnataka during 1994 submitted an application with the requisite particulars dated:
07.02.1996 for financial assistance in the form of private placement of non-convertible debentures for an amount of ₹.400.00 lakhs of the face value of ₹.100/- each.
12. The Petitioner Corporation had informed the first respondent to obtain a no objection certificate from I.D.B.I. with which financial institution the first respondent has had financial dealings. The IDBI opined vide letter dated:
22.03.1996, that they have no objections to the first respondent to avail financial assistance from the Petitioner Corporation.
13. The first respondent by letter dated: 28.03.1996 has informed that the first respondent is venturing to raise the moneys by floating equity shares at a premium in two stages, i.e. ₹.12.00 Crores in May 1993 and ₹.28.00 Crores in May 1994. As such there would be no difficulty to discharge the loan liabilities.
14. As per the communication dated: 31.03.1996 issued in No:ACCTS/LCD/8778/95-96 intimated the first respondent that petitioner has sanctioned a sum of ₹.400.00 lakhs by way /9/ Com.Misc.No.68/1998 of secured redeemable non-convertible debentures by private placement. Further the first respondent was asked to execute the necessary security documents to secure the loan.
15. The first respondent has furnished a fresh no objections certificate dated: 22.04.1996 issued by the IDBI.
16. By letter dated: 03.05.1996 the petitioner informed the first respondent that the debentures together with interest and costs and all the moneys will have to be secured by means of collateral security of the property situate at Bombay, viz., Flat No:162, in the XVI floor of Silver Arch at No:66, L Jagmohan Das Marg, Bombay-400 006 owned by third respondent herein. Further it was also insisted that the second respondent will have to execute an irrevocable unconditional personal guarantee being the Managing Director of the First Respondent to repay the liabilities of the first respondent.
17. The first respondent has executed loan agreement dated: 23.04.1996 as per terms in Article II of the said loan agreement, the first respondent was required to allot by way of private placement, 400.00 lakhs redeemable non-convertible debentures to secure the loan released to the extent as aforesaid and further the first respondent has agreed to pay interest at 23% p.a. till the debentures are redeemed or paid /10/ Com.Misc.No.68/1998 off. That in the manner indicated in para 3.2 of the said agreement, the interest is required to be paid on quarterly rest basis. The agreement also provides for payment of compound interest. The first respondent has also agreed to pay interest at 25.5% in the event of default in the redemption of debentures on the footing of compound interest at quarterly rest basis. Further, the petitioner requested right to revise the interest and the first respondent has agreed to execute security documents in the event of rate of interest being revised. The first respondent has also agreed to reimburse the expenses incurred in the event of the petitioner making any outgoing payments on behalf of the first respondent including paying insurance premium with interest at 25.5% p.a.
18. The first respondent has agreed to issue debentures on the terms and conditions incorporated as per para 3(1) of the loan agreement. The first respondent has agreed to redeem the debentures required to be issued on the expiry of 18 months from the date of allotment, as per Clause 3.7 of the loan agreement. The first respondent has agreed to issue debenture certificates after complying with the provisions of Section 113(1) of the Companies Act, 1956. The manner of appropriation of payment if made by the first respondent is detailed in clause 3.11 of the loan agreement and accordingly /11/ Com.Misc.No.68/1998 the first respondent has paid affront fee as per clause 3.10 of the agreement.
19. In terms of clause 4.2 of the loan agreement, the third respondent at the request of first respondent has given the immovable property viz., Flat No:162, 16 th floor, Silver Arch Jagmohan Das Marg, Bombay 400 006, the details of which are furnished in Schedule A of the petition.
20. As an additional security the second respondent the Managing Director of the First Respondent has agreed and undertaken to pay the dues of the first respondent on default and accordingly has executed an irrevocable guarantee deed dated:23.04.1996 in favor of Petitioner Corporation.
21. In terms of the loan agreement the first respondent issued a letter of allotment of four lakhs non convertible debentures with effect from 01.06.1996 under first respondent's letter dated: 16.07.1996.
22. Subsequently, the first respondent made an application to the Company Law Board under section 113 of Companies Act, as per letter dated: 19.11.1996.
/12/ Com.Misc.No.68/1998
23. The first respondent by letter dated:29.08.1996 has confirmed the receipt of ₹.300 Lakhs out of ₹.400 lakhs sanctioned towards the allotment of non-convertible debentures and further requested to lease the balance amount of ₹.100 lakhs.
24. The first respondent by his letter dated:16.08.1996 informed the Petitioner Corporation that the Company is not in a position to pay the interest amount of ₹.16,01,370/- fallen due and sought time till 10.09.1996 to pay the dues.
25. The first respondent by his letter dated:03.05.1996 volunteered to give further security to the entire assistance of ₹.400 Lakhs and offered properties belonging to Respondents No: 4 to 9 situate at 11th Floor, Mittal Towers, Bengaluru.
26. The Respondent No:1 and 4 and respondent No:2 being the Managing Director of Respondent No:4 as well have executed a surety agreement dated:03.05.1996 offering the properties namely office unit Bg.No:1106 (Corporation Sub- Number 6/467) located in the 11 th floor, C Wing, Mittal Towers, Bengaluru, as collateral security to entire loan availed by the first respondent.
/13/ Com.Misc.No.68/1998
27. The Respondent No:4 by depositing title deeds has also created an equitable mortgage and the Second respondent as the Managing Director of Respondent No:4 did participated in recording Memorandum of Entry recorded on 03.05.1996.
28. The Respondent No:5 and Respondent No:1 the Respondent No:2 being the Managing Director of Respondent No:5 as well has executed a surety agreement dated:03.05.1996 offering the properties namely office unit Bg.No:1103 and 1104 located in the 11th floor, C Wing, Mittal Towers, Bengaluru, as collateral security to entire loan availed by the first respondent.
29. The Respondent No:5 by depositing title deeds has also created an equitable mortgage and the Second respondent as the Managing Director of Respondent No:5 did participated in recording Memorandum of Entry recorded on 03.05.1996.
30. The Respondent No:6 and Respondent No:1 the Respondent No:2 being the Managing Director of Respondent No:6 as well has executed a surety agreement dated:03.05.1996 offering the properties namely office unit Bg.No:1109 and 1110 located in the 11th floor, C Wing, Mittal /14/ Com.Misc.No.68/1998 Towers, Bengaluru, as collateral security to entire loan availed by the first respondent.
31. The Respondent No:6 by depositing title deeds has also created an equitable mortgage and the Second respondent as the Managing Director of Respondent No:6 did participated in recording Memorandum of Entry recorded on 03.05.1996.
32. The Respondent No:7 and Respondent No:1 the Respondent No:2 being the Managing Director of Respondent No:7 as well has executed a surety agreement dated:03.05.1996 offering the properties namely office unit Bg.No:1105 located in the 11 th floor, C Wing, Mittal Towers, Bengaluru, as collateral security to entire loan availed by the first respondent.
33. The Respondent No:7 by depositing title deeds has also created an equitable mortgage and the Second respondent as the Managing Director of Respondent No:7 did participated in recording Memorandum of Entry recorded on 03.05.1996.
34. The Respondent No:8 and Respondent No:1 the Respondent No:2 being the Managing Director of Respondent /15/ Com.Misc.No.68/1998 No:5 as well has executed a surety agreement dated:03.05.1996 offering the properties namely office unit Bg.No:1101 and 1102 located in the 11th floor, C Wing, Mittal Towers, Bengaluru, as collateral security to entire loan availed by the first respondent.
35. The Respondent No:8 by depositing title deeds has also created an equitable mortgage and the Second respondent as the Managing Director of Respondent No:8 did participated in recording Memorandum of Entry recorded on 03.05.1996.
36. The Respondent No:9 and Respondent No:1 the Respondent No:2 being the Managing Director of Respondent No:9 as well has executed a surety agreement dated:03.05.1996 offering the properties namely office unit Bg.No:1106 located in the 11 th floor, C Wing, Mittal Towers, Bengaluru, as collateral security to entire loan availed by the first respondent.
37. The Respondent No:9 by depositing title deeds has also created an equitable mortgage and the Second respondent as the Managing Director of Respondent No:9 did participated in recording Memorandum of Entry recorded on 03.05.1996.
/16/ Com.Misc.No.68/1998
38. The first respondent has failed to pay interest on the debentures agreed to be issued in terms of agreement dated:23.04.1996 and having failed to issue debenture certificates in terms of allotment letter issued, the entire transaction amounts to debt within the meaning of Section 433(e) of the Companies Act, 1956. The letter of allotment of debentures serves as security to enforce recovery. The debentures whether issued under the seal of the first respondent or not acknowledged the debt and secure repayment thereof by mortgage or charge on the company's property and or undertakings.
39. The first respondent in spite of several demands made and notice issued, failed to repay the loan installments as per agreement. In view of the default, the cause of action accrued to the petitioner Corporation to enforce the guarantee deeds executed by the Respondent No:2 and 3. The guarantee offered by the Respondent No:2 and 3 are continuing guarantees.
40. The first respondent has committed default in payment of interest on quarterly rest basis. The petitioner has issued a letter dated: 26.02.1997 and D.O.Letter dated:07.05.1997 to the second respondent.
/17/ Com.Misc.No.68/1998
41. The first respondent instead of paying interest has denied the default in payment of installments vide his letter dated:25.05.1997. The defaulted interest installments amounted to ₹.76,39,732-49 as on 31.07.1997. Hence, the petitioner corporation has recalled the entire loan amount of ₹.3,76,39,732-49 including the interest by issuing a registered notice dated:13.08.1997 apart from invoking the surety agreements dated:23.04.1996 and 29.03.1996 executed by respondent No:2 and 3 respectively. The respondent No:2 and 3 have not replied to the said notice. The surety agreements executed by Respondent No:4 to 9 were also invoked reminding them of their obligations under the agreements.
42. The second respondent was called for a meeting for discussion to sort out the issues involved, but the second respondent showed scant regard and never attended nor deputed any of the directors of the Company for discussion.
43. The second respondent in his capacity as a guarantor and respondents No: 3 to 9 in their capacity as sureties having failed to discharge their liabilities under the deed of guarantees/surety agreements, hence, the petitioner has filed this petition to recover ₹.3,76,39,732-49 as on 31.07.1997 and interest at 25.5% p.a. on 3,76,39,732-49 from 01.08.1997 till the payment of entire amount and other allied reliefs.
/18/ Com.Misc.No.68/1998
44. After the service of summons the respondent No. 1 to 3 appeared through their advocate and they have not filed objections to the petition. The Respondent No:4 to 9 remained absent and are placed exparte. The Petitioner Corporation filed an application to implead the Respondent No:10 and 11. The Petitioner Corporation filed a memo on 19.12.2006 stating that I.A. to implead Respondent No:11 may be closed. Accordingly, Memo was accepted. The Respondent No:10 filed objections to main petition. Subsequently, the name of Respondent No:10 was amended in view of amalgamation of M/S.Rajasthan Bank with ICICI Bank.
The case of Respondent No:10 is as under:
45. The petition is not maintainable either in law or on facts of the case. The Petitioner Corporation has arraigned the Respondent No:10 and 11 as necessary and proper parties.
The respondent No:10 has denied the contents of the petition.
46. The Petitioner Corporation has filed a suit O.S.No:9697 of 2005 before the City Civil Judge, Bengaluru against Respondent Nos. 1, 4 to 11 (including respondent No:10) seeking a declaration that the sale deed executed by the Court Commissioner dated:23rd March 2002 registered in the office of /19/ Com.Misc.No.68/1998 the Sub-Registrar, Shivaji Nagar, Bangalore Urban District in No.BNG(U)SNGR.138/2002-03 in Book-I-13-13 is not binding on the applicant and for a perpetual injunction restraining Respondent No:1, 10 and 11 not to interfere with mortgaged properties as the same is in the possession of present Court by virtue of Attachment Order dated:22nd January 1998 against the defendant No:1 to 9. The present petition is not maintainable and the same ought to be dismissed with costs as the applicant cannot prosecute two applications for the same relief.
47. The Respondent No:11 had entered into several leasing and hire purchase agreements with the Respondent No:4 to 9, in respect of which, for the purpose of the security the Respondent No:4 to 9 had deposited the title deeds in respect of the subject properties with the Respondent No:11 on 11th December 1995 and the same was registered with ROC vide Certificate dated:13th May 1996. Thereafter, the Respondent No: 4 to 9 had committed defaults in making the payments, when the parties entered in to a Memorandum of Understanding on 20th March 1997 whereby the Respondent No:4 to 9 agreed to transfer the subject properties in favor of Respondent No:11. However, the Respondent No: 4 to 9 failed to transfer the subject properties in favor of the Respondent No:11, owing to which the Respondent No:11 had filed Suit /20/ Com.Misc.No.68/1998 No:264 of 1998 against the Respondent No:2, and 4 to 9 for specific performance. Subsequently, the said suit was compromised by and between the parties and decree was passed in terms of settlement on 7 th September 2001 whereby a Receiver was appointed for the purpose of executing and registering the conveyance in respect of the said property in favor of the Respondent No:11.
48. The Respondent No:10 had filed Original Application Bg.no:11 of 1999 before the Debts Recovery Tribunal, Calcutta against the Respondent No:11 for recovery of certain amounts due to it. During the pendency of the said original Application, the Respondent No:11 proposed a One Time Settlement, the terms and conditions of which were reduced in to writing on 13th February 20002. By the said terms, the Respondent No:11 agreed to transfer ownership of the subject properties (clear and marketable) in favor of Respondent No:10 by way of a registered conveyance deed, towards settlement of claim. Accordingly, a conveyance deed was executed by the Receiver appointed by the Hon'ble High Court, Calcutta in favor of Respondent No:10 on 23rd February 1992. In pursuance of the terms of Compromise decree recorded on 14 th February 2002 in OA No:11 of 1999, the said properties were rightly transferred by the Court Receiver on 23 rd March 2002 in favor of Respondent No:10. The said transfer is genuine and /21/ Com.Misc.No.68/1998 bonafide transfer for value made by the Respondent No:11 in favor of Respondent No:10. The said deed of conveyance is valid and binding.
49. The Respondent No:10 was not aware of the alleged charge of the Applicant on the said properties and does not admit the same. Even assuming without admitting that the Petitioner Corporation was entitled to any right on the suit property, the same was only upon satisfaction of the claim of the Respondent No:11. There is no proof that the Respondent No:11 who had first charge on the suit properties had satisfied its claim in full and that any amounts were available in balance for payment to the Petitioner Corporation. There has been a conversion of the asset from one form to another i.e. the Respondent No:11 had converted din to money the assets on which it had first charge, assuming without admitting that the Petitioner Corporation had a second charge on the property, and hence it would have no claim on the above said properties.
50. The Respondent No:10 was not aware of purported attachment levied by the Court in the present case. If the applicant is able to prove its charge in respect of the said property the Respondent No:10 reserves its right to initiate appropriate action for fraud against the concerned persons.
/22/ Com.Misc.No.68/1998
51. The Respondent No:10 is not aware of the contents of para 1 to 51 of the petition. The properties of Respondent No: 4 to 9 were mortgaged to the Respondent No:11 much prior in point of time to the alleged mortgage created in favor of the Petitioner Corporation. Even assuming without admitting that the Petitioner Corporation had a charge on the subject properties the same is only second and subservient to the charge created in favor of Respondent No:11. In these circumstances the rights of Respondent No:10 in respect of immovable properties described herein above may be protected by this Court while deciding the present petition. The petition may be dismissed with heavy costs.
52. The Petitioner Corporation has examined Sri.N.P.Yogananda as PW.1 and Sri.M.Manjunath as PW2. The Petitioner Corporation has exhibited Ex.P1 to Ex.P.29 and got marked Ex.P.30 to P35 in the cross examination of RW.1. The Respondent No:10 has examined Sri.Ratnesh Sharma as RW1. The Respondent No:10 has exhibited Ex.R1 to Ex.R42.
53. After of the conclusion of trial, I have heard the arguments of learned advocate for Petitioner Corporation and Respondent No:10. The Learned Counsel for Petitioner Corporation has also filed written Arguments and relied on 3 /23/ Com.Misc.No.68/1998 citations in support of his case. I have gone through the materials available on record.
54. The following points arise for my determination:
(1). Whether the Petitioner Corporation proves that the respondents No.2 to 9 are jointly and severally liable to pay a sum of ₹.3,76,39,732-49 as on 31.07.1997 with interest @ 22.5% p.a. compounded at quarterly rests from 01.08.1997? (2) Whether the Petitioner Corporation proves that the Schedule 'A' to 'G' properties are liable for attachment and sale for the realization of dues of the Petitioner Corporation?
(3) Whether the Respondent No:10 proves that the Schedule 'B' to 'G' properties are not liable for attachment and sale for the realization of dues of the Petitioner Corporation?
(4) What order?
55. My findings on the above points are as follows:-
Point No. 1 : - In the AFFIRMATIVE Point No. 2 : - In the AFFIRMATIVE IN PART Point No. 3 : - In the AFFIRMATIVE Point No. 4 : - As per final orders for the following /24/ Com.Misc.No.68/1998 REASONS
56. Point No.1 to 3 : These three points are interlinked to each other as such they are taken together for discussion to avoid repetition of facts.
57. The Petitioner Corporation has filed this petition under section 31(1)(aa) of State Financial Corporation Act, 1951 praying the Court to
g) Declare a sum of ₹.3,76,39,732-49 is due to the petitioner Corporation as on 31.07.1997 with future interest at 25.50% on the footing of compound interest at quarterly rest basis on the said amount of ₹.3,76,39,732-49 from 01.08.1997 till the entire amount is realized;
h) Declare a sum of ₹.3,76,39,732-49 as on 31.07.1997 is due from the second respondent with future interest at 25.50% on the footing of compound interest at quarterly rest basis under the deed of guarantee dated:23.04.1996;
i) Pass an order that the Respondents No:3 to 9 are jointly and/or severally liable to pay the said sum of ₹.3,76,39,732-00 with future interest at 25.50% p.a. on the footing of compound interest on quarterly rest basis in terms of surety agreement dated:23.04.1996 executed by the third respondent and the surety /25/ Com.Misc.No.68/1998 agreement executed by respondents 4 to 9 on 03.05.1996;
j) pass on order for sale of petition schedule premises as detailed in Schedule A to G have been given as collateral security by respondent No:3 to 9;
k) Confirm the ad-interim order of attachment made under section 32 of the SFC Act;
l) And pass such other orders or grant such other reliefs as are deemed necessary in the circumstances of the case, including the costs of the petition.
58. The Deputy Manager of Petitioner Corporation N.P.Yogendra Murthy adduced his evidence as PW.1. He has exhibited Ex.P.1 to 28. The Deputy Manager of Petitioner Corporation Sri.M.Manjunath, adduced his evidence as PW.2. He has exhibited Ex.P.29. Ex.P30 to 35 are marked in the Cross Examination of RW1. The details of Ex.P1 to Ex.P35 are as under:
Exhibit Sl.No. Description of Documents No.
01. Extract of Resolution P1
02. Application made by 1st P2 respondent during 1996
03. Copy of letter dated 22.03.96 from P3 IDBI 04 Copy of letter dated 28.03.96 of P4 1st respondent
05. Sanction communication dated P5 31.03.1996 /26/ Com.Misc.No.68/1998
06. No objection certificate dated P6 22.04.1996
07. Guarantee deed dated 23.04.1996 P7 executed by 2nd respondent
08. Loan agreement dated 23.04.1996 Ex.P8 executed by 1st respondent
09. Surety agreement dated Ex.P9 03.05.1996
10. Copy of the letter dated Ex.P10 26.07.1996 of the 1 respondent st
11. Copy of the letter dated Ex.P11 29.08.1996 of 1 respondent st
12. Copy of the letter dated Ex.P12 16.08.1996 of 1st respondent
13. Surety agreement executed by 4th Ex.P13 to 9th respondents dated 03.05.1996
14. Memorandum of Entry of 4th Ex.P14 respondent dated 03.05.1996
15. Surety agreement dated Ex.P.15 03.05.1996
16. Memorandum of Entry dated Ex.P.16 03.05.1996 of the 5th respondent
17. Surety agreement dated Ex.P.17 03.05.1996 executed by 6th respondent
18. Memorandum of Entry of the 6th Ex.P.18 respondent dated 03.05.1996
19. Surety Agreement dated Ex.P.19 03.05.1996 executed by 7th respondent
20. Memorandum of Entry- 7th Ex.P.20 respondent dated 03.05.1996
21. Surety agreement executed by 8th Ex.P.21 respondent
22. MOU recorded by 8th respondent Ex.P.22 on 03.05.1996 /27/ Com.Misc.No.68/1998
23. Surety agreement executed by 9th Ex.P.23 respondent dated 03.05.1996
24. MOU recorded by 9th respondent Ex.P.24 dated 03.05.1996
25. Copy of notice dated 13.08.1997 Ex.P.25
26. Extract of statement of accounts Ex.P.26.
27. Postal acknowledgments Ex.P.27
(a) to (i)
28. Statement of Accounts Ex.P.28
29. Copy of Memorandum of appeal Ex.P29 filed in M.A.No.8/2003 before the DRT
30. Copy of the attachment order and Ex.P30 its enclosures Mis.No:68/98
31. Copy of order dated:09.03.2009 Ex.P31 passed by Hon'ble High Court of Karnataka in W.P.No.278/2009(GM- CPC)
32. Copy of the Order passed by Ex.P32 Hon'ble High Court of Calcutta in O.S.No:264 of 1998
33. Copy of the Compromise Order Ex.P33 dated:17.08.2000 passed by the Hon'ble High Court of Calcutta in O.S.No:264 of 1998
34. Copy of the registered Sale deed Ex.P34 dated:23.03.2002
35. Copy of the legal notice issued by Ex.P35 the Petitioner The Petitioner has received the original documents as sought in I.A.filed under Order XIII Rule 9(1) r.w.s.151 CPC dated:06.07.2013 by furnishing certified copies.
The Petitioner has not returned the original documents.
/28/ Com.Misc.No.68/1998
59. The respondent No.10 examined Sri.Ratnesh Sharma, the Manager (Law) as RW.1. He has exhibited Ex.R.1 to 42 as under:
Exhibit Sl.No. Description of Documents No.
01. Copy of the plaint filed in R1 O.S.No:9697/2005
02. Copy of Power of Attorney R2
03. Order sheet dtd.7.12.2007 passed R3 in M.A. No.8/2003 on the file of DRT, Kolkota
04. Two letters dated 18.06.2004 R.4 & 5 issued by Mittal Tower Commercial Complex Owners Association, Bengaluru
05. Two cash receipts dated R.6 & 7 16.06.2004
06. Certificate issued by Debt R.8 Recovery Tribunal, West Bengal in OA.No.11/1999
07. Six Encumbrance Certificates R.9 to 14 dated 15.12.2001 issued by Panal Advocate
08. Two payment receipts issued by R.15 & Senior Sub-Registrar, Shivajinagar, 16 Bengaluru
09. Six Encumbrance Certificates R.17 to issued b y Senior Sub-Registrar, 22 Shivajinagar, Bengaluru
10. Six Encumbrance Certificates R.23 to issued by Panel Advocate 28
11. Six Encumbrance Certificates R29 to issued by Senior Sub-Registrar, 34.
Shivajinagar, Bengaluru /29/ Com.Misc.No.68/1998 12 Search Report R35
13. Six Fee receipts R36
14. Letter dated 20.11.2012 R37
15. Certified copy of orders of DRT R.38 & 38(a)
16. Certified copy of Orders of DRT R39 & 39(a)
17. Compromise Order passed in Ex.R40 O.S.No:264 of 1998 by Hon'ble High Court of Calcutta
18. Copy of the Judgment Ex.R41 dated:02.01.2016 passed in O.S.No:9697/2005
19. Copy of decree dated:02.01.2016 Ex.R42 passed in O.S.No:9697/2005
60. The PW1 has reiterated the petition averments in his affidavit evidence. PW2 has subsequently affirmed the deposition of PW1 and exhibited Ex.P29 only. In order to corroborate its case the Petitioner Corporation has exhibited Ex.P1 to Ex.P35 as detailed above.
61. It is the case of the petitioner that the first respondent is a company incorporated under the Companies Act under the name and style Grapco Granite Limited as per the registration certificate dated:13.07.1988 issued by the Registrar of Companies, Orissa State.
62. The first respondent has changed its name as M/S.GRAPCO INDUSTRIES LTD., as a result of diversification of its activities and has obtained a fresh certificate under Section /30/ Com.Misc.No.68/1998 21 of the Companies Act, on 07.12.1994 from the Registrar of Companies, Orissa state.
63. The registered office of the Company is at Plot No: 4, Somaathur Industrial Estate, Balasur District, Orissa state. It has its Corporate Office at Calcutta and factories at Rajasthan and Karnataka also.
64. The authorized share capital of the Company is 60.00 Crores and its paid up capital being ₹.23.35 Crores of which public holdings constitute 56% as per the particulars furnished by the first respondent.
65. The first respondent Company is engaged in the manufacture and export of granite tiles and granite slabs having gag of 100% Export Oriented Unit (100% E.O.U.) As such granite slabs are cut by the instrument made of diamonds. As reported by the first respondent the Company went in production during 1989 at Somanathapura Industrial Estate, Balsore District, Orissa and started exporting its products to various states.
66. The second respondent being a promoter is also managing director of the first respondent.
/31/ Com.Misc.No.68/1998
67. As per the minutes of the VII annual general meeting held on 29.11.1995 at its registered office, the Board of Directors of the Company were authorized under section 293(1)(d) of the Companies Act, 1956 to borrow moneys up to the extent of ₹.250.00 Crores inclusive of moneys already borrowed notwithstanding such sum or sums of moneys exceed paid up capital of the company of its free reserve.
68. The first respondent having set up a granite processing unit in the State of Karnataka during 1994 submitted an application with the requisite particulars dated:
07.02.1996 for financial assistance in the form of private placement of non-convertible debentures for an amount of ₹.400.00 lakhs of the face value of ₹.100/- each as per Ex.P2.
69. The Petitioner Corporation had informed the first respondent to obtain a no objection certificate from I.D.B.I. with which financial institution the first respondent has had financial dealings. The IDBI opined vide letter dated:
22.03.1996, that they have no objections to the first respondent to avail financial assistance from the Petitioner Corporation as per Ex.P3.
70. The first respondent by letter dated: 28.03.1996 has informed that the first respondent is venturing to raise the moneys by floating equity shares at a premium in two stages, /32/ Com.Misc.No.68/1998 i.e. ₹.12.00 Crores in May 1993 and ₹.28.00 Crores in May 1994. As such there would be no difficulty to discharge the loan liabilities as per Ex.P4.
71. As per the communication dated: 31.03.1996 issued in No:ACCTS/LCD/8778/95-96 intimated the first respondent that petitioner has sanctioned a sum of ₹.400.00 lakhs by way of secured redeemable non-convertible debentures by private placement. Further the first respondent was asked to execute the necessary security documents to secure the loan as per Ex.P5.
72. The first respondent has furnished a fresh no objections certificate dated: 22.04.1996 issued by the IDBI as per Ex.P6.
73. By letter dated: 03.05.1996 the petitioner informed the first respondent that the debentures together with interest and costs and all the moneys will have to be secured by means of collateral security of the property situate at Bombay, viz., Flat No:162, in the XVI floor of Silver Arch at No:66, L Jagmohan Das Marg, Bombay-400 006 owned by third respondent herein. Further it was also insisted that the second respondent will have to execute an irrevocable unconditional personal guarantee being the Managing Director of the First /33/ Com.Misc.No.68/1998 Respondent to repay the liabilities of the first respondent.
74. The first respondent has executed loan agreement dated: 23.04.1996 (Ex.P7) as per terms in Article II of the said loan agreement, the first respondent was required to allot by way of private placement, 400.00 lakhs redeemable non- convertible debentures to secure the loan released to the extent as aforesaid and further the first respondent has agreed to pay interest at 23% p.a. till the debentures are redeemed or paid off. That in the manner indicated in para 3.2 of the said agreement, the interest is required to be paid on quarterly rest basis. The agreement also provides for payment of compound interest. The first respondent has also agreed to pay interest at 25.5% in the event of default in the redemption of debentures on the footing of compound interest at quarterly rest basis. Further, the petitioner requested right to revise the interest and the first respondent has agreed to execute security documents in the event of rate of interest being revised. The first respondent has also agreed to reimburse the expenses incurred in the event of the petitioner making any outgoing payments on behalf of the first respondent including paying insurance premium with interest at 25.5% p.a.
75. The first respondent has agreed to issue debentures on the terms and conditions incorporated as per para 3(1) of the loan agreement. The first respondent has agreed to /34/ Com.Misc.No.68/1998 redeem the debentures required to be issued on the expiry of 18 months from the date of allotment, as per Clause 3.7 of the loan agreement. The first respondent has agreed to issue debenture certificates after complying with the provisions of Section 113(1) of the Companies Act, 1956. The manner of appropriation of payment if made by the first respondent is detailed in clause 3.11 of the loan agreement and accordingly the first respondent has paid upfront fee as per clause 3.10 of the agreement. Loan Agreement is exhibited as Ex.P8.
76. In terms of clause 4.2 of the loan agreement, the third respondent at the request of first respondent has given the immovable property viz., Flat No:162, 16 th floor, Silver Arch Jagmohan Das Marg, Bombay 400 006, the details of which are furnished in Schedule A of the petition.
77. As an additional security the second respondent the Managing Director of the First Respondent has agreed and undertaken to pay the dues of the first respondent on default and accordingly has executed an irrevocable guarantee deed dated:23.04.1996 in favor of Petitioner Corporation as per Ex.P9.
78. In terms of the loan agreement the first respondent issued a letter of allotment of four lakhs non convertible debentures with effect from 01.06.1996 under first /35/ Com.Misc.No.68/1998 respondent's letter dated: 16.07.1996 as per Ex.P10.
79. Subsequently, the first respondent made an application to the Company Law Board under section 113 of Companies Act, as per letter dated: 19.11.1996.
80. The first respondent by letter dated:29.08.1996 has confirmed the receipt of ₹.300 Lakhs out of ₹.400 lakhs sanctioned towards the allotment of non-convertible debentures and further requested to lease the balance amount of ₹.100 lakhs as per Ex.P11.
81. The first respondent by his letter dated:16.08.1996 as per Ex.P12 informed the Petitioner Corporation that the Company is not in a position to pay the interest amount of ₹.16,01,370/- fallen due and sought time till 10.09.1996 to pay the dues.
82. The first respondent by his letter dated:03.05.1996 volunteered to give further security to the entire assistance of ₹.400 Lakhs and offered properties belonging to Respondents No: 4 to 9 situate at 11th Floor, Mittal Towers, Bengaluru.
83. The Respondent No:1 and 4 and respondent No:2 being the Managing Director of Respondent No:4 as well have executed a surety agreement dated:03.05.1996 offering the /36/ Com.Misc.No.68/1998 properties namely office unit Bg.No:1106 (Corporation Sub- Number 6/467) located in the 11 th floor, C Wing, Mittal Towers, Bengaluru, as collateral security to entire loan availed by the first respondent as per Ex.P13.
84. The Respondent No:4 by depositing title deeds has also created an equitable mortgage and the Second respondent as the Managing Director of Respondent No:4 did participated in recording Memorandum of Entry recorded on 03.05.1996 as per Ex.P14.
85. The Respondent No:5 and Respondent No:1 the Respondent No:2 being the Managing Director of Respondent No:5 as well has executed a surety agreement dated:03.05.1996 offering the properties namely office unit Bg.No:1103 and 1104 located in the 11th floor, C Wing, Mittal Towers, Bengaluru, as collateral security to entire loan availed by the first respondent as per Ex.P15.
86. The Respondent No:5 by depositing title deeds has also created an equitable mortgage and the Second respondent as the Managing Director of Respondent No:5 did participated in recording Memorandum of Entry recorded on 03.05.1996 as per Ex.P16.
/37/ Com.Misc.No.68/1998
87. The Respondent No:6 and Respondent No:1 the Respondent No:2 being the Managing Director of Respondent No:6 as well has executed a surety agreement dated:03.05.1996 offering the properties namely office unit Bg.No:1109 and 1110 located in the 11th floor, C Wing, Mittal Towers, Bengaluru, as collateral security to entire loan availed by the first respondent as per Ex.P17.
88. The Respondent No:6 by depositing title deeds has also created an equitable mortgage and the Second respondent as the Managing Director of Respondent No:6 did participated in recording Memorandum of Entry recorded on 03.05.1996 as per Ex.P18.
89. The Respondent No:7 and Respondent No:1 the Respondent No:2 being the Managing Director of Respondent No:7 as well has executed a surety agreement dated:03.05.1996 offering the properties namely office unit Bg.No:1105 located in the 11 th floor, C Wing, Mittal Towers, Bengaluru, as collateral security to entire loan availed by the first respondent as per Ex.P19.
90. The Respondent No:7 by depositing title deeds has also created an equitable mortgage and the Second respondent as the Managing Director of Respondent No:7 did /38/ Com.Misc.No.68/1998 participated in recording Memorandum of Entry recorded on 03.05.1996 as per Ex.P20.
91. The Respondent No:8 and Respondent No:1 the Respondent No:2 being the Managing Director of Respondent No:5 as well has executed a surety agreement dated:03.05.1996 offering the properties namely office unit Bg.No:1101 and 1102 located in the 11th floor, C Wing, Mittal Towers, Bengaluru, as collateral security to entire loan availed by the first respondent Ex.P21.
92. The Respondent No:8 by depositing title deeds has also created an equitable mortgage and the Second respondent as the Managing Director of Respondent No:8 did participated in recording Memorandum of Entry recorded on 03.05.1996 as per Ex.P22.
93. The Respondent No:9 and Respondent No:1 the Respondent No:2 being the Managing Director of Respondent No:9 as well has executed a surety agreement dated:03.05.1996 offering the properties namely office unit Bg.No:1106 located in the 11 th floor, C Wing, Mittal Towers, Bengaluru, as collateral security to entire loan availed by the first respondent as per Ex.P23.
/39/ Com.Misc.No.68/1998
94. The Respondent No:9 by depositing title deeds has also created an equitable mortgage and the Second respondent as the Managing Director of Respondent No:9 did participated in recording Memorandum of Entry recorded on 03.05.1996 as per Ex.P24.
95. The first respondent has failed to pay interest on the debentures agreed to be issued in terms of agreement dated:23.04.1996 and having failed to issue debenture certificates in terms of allotment letter issued, the entire transaction amounts to debt within the meaning of Section 433(e) of the Companies Act, 1956. The letter of allotment of debentures serves as security to enforce recovery. The debentures whether issued under the seal of the first respondent or not acknowledged the debt and secure repayment thereof by mortgage or charge on the company's property and or undertakings.
96. The first respondent in spite of several demands made and notice issued, failed to repay the loan installments as per agreement. In view of the default, the cause of action accrued to the petitioner Corporation to enforce the guarantee deeds executed by the Respondent No:2 and 3. The guarantee offered by the Respondent No:2 and 3 are continuing guarantees.
/40/ Com.Misc.No.68/1998
97. The first respondent has committed default in payment of interest on quarterly rest basis. The petitioner has issued a letter dated: 26.02.1997 and D.O.Letter dated:07.05.1997 to the second respondent.
98. The first respondent instead of paying interest has denied the default in payment of installments vide his letter dated:25.05.1997. The defaulted interest installments amounted to ₹.76,39,732-49 as on 31.07.1997. Hence, the petitioner corporation has recalled the entire loan amount of ₹.3,76,39,732-49 including the interest by issuing a registered notice dated:13.08.1997(Ex.P25) apart from invoking the surety agreements dated:23.04.1996 and 29.03.1996 executed by respondent No:2 and 3 respectively. The respondent No:2 and 3 have not replied to the said notice. The surety agreements executed by Respondent No:4 to 9 were also invoked reminding them of their obligations under the agreements.
99. The second respondent was called for a meeting for discussion to sort out the issues involved, but the second respondent showed scant regard and never attended nor deputed any of the directors of the Company for discussion.
/41/ Com.Misc.No.68/1998
100. The second respondent in his capacity as a guarantor and respondents No: 3 to 9 in their capacity as sureties having failed to discharge their liabilities under the deed of guarantees/surety agreements, hence, the petitioner has filed this petition to recover ₹.3,76,39,732-49 as on 31.07.1997 and interest at 25.5% p.a. on 3,76,39,732-49 from 01.08.1997 (as evidenced by Ex.P26 and Ex.P28) till the payment of entire amount and other allied reliefs.
101. The Petitioner Corporation has arraigned Respondent No:10 on record but has not sought any relief against Respondent No:10. The Respondent No:10 is not a party to the loan transaction transpired between the Petitioner Corporation and Respondent No:1 to 9. The Respondent No:10 is praying the Court to release Schedule 'B' to 'G' properties and dismiss the petition with respect to said properties. The Respondent No:1 to 3 have not filed objections. The Respondent No:1 to 9 have not contested the case of the Petitioner Corporation. The evidence adduced by the Petitioner Corporation regarding sanction of loan, execution of loan documents by Respondent No:1 to 9 remained unchallenged. The dispute in this case is with respect to entitlement of Petitioner Corporation to realize its dues by attachment and sale of schedule 'B' to 'G' properties. Except the contention raised by Respondent No:10, all other claim made by the /42/ Com.Misc.No.68/1998 Petitioner Corporation remain un-controverted. The Petitioner Corporation has established that the Respondent No:1 to 9 are jointly and severally liable to pay the Petitioner Corporation a sum of ₹.3,76,39,372-49 as on 31.07.1997 with future interest at 25.5% p.a. compounded at quarterly rests from 01.08.1997 till the date of payment.
102. The Respondent No:10/RW1 has reiterated the averments made in the objections statement in his affidavit evidence.
103. The Petitioner Corporation is not able to elicit any material helpful to its case so as to reject the prayer of Respondent No:10.
104. The Petitioner Corporation is contending that schedule 'B' to 'G" properties are also amenable for attachment and sale for realization of dues of the Corporation, as Respondent No: 1 to 9 have offered these properties as security for repayment of dues of the Petitioner Corporation by way of Mortgage. The Respondent No:10 is not disputing the creation of mortgage and offering 'B' to 'G' schedule properties as security by respondents No:1 to 9 in favor of the Petitioner Corporation. It is the case of Respondent that No.10 that the Respondent No:11 had entered into several leasing /43/ Com.Misc.No.68/1998 and hire purchase agreements with the Respondent No:4 to 9, in respect of which, for the purpose of the security the Respondent No:4 to 9 had deposited the title deeds in respect of the subject properties with the Respondent No:11 on 11 th December 1995 and the same was registered with ROC vide Certificate dated:13th May 1996. Thereafter, the Respondent No: 4 to 9 had committed defaults in making the payments, when the parties entered in to a Memorandum of understanding on 20th March 1997 whereby the Respondent No:4 to 9 agreed to transfer the subject properties in favor of Respondent No:11. However, the Respondent No: 4 to 9 failed to transfer the subject properties in favor of the Respondent No:11, owing to which the Respondent No:11 had filed Suit No:264 of 1998 against the Respondent No:2, and 4 to 9 for specific performance. Subsequently, the said suit was compromised by and between the parties and decree was passed in terms of settlement as per Ex.R40. On 7 th September 2001 a Receiver was appointed for the purpose of executing and registering the conveyance in respect of the said property in favor of the Respondent No:11.
105. The Respondent No:10 had filed Original Application Bg.no:11 of 1999 before the Debts Recovery Tribunal, Calcutta against the Respondent No:11 for recovery of certain amounts /44/ Com.Misc.No.68/1998 due to it. During the pendency of the said original Application, the Respondent No:11 proposed a One Time Settlement, the terms and conditions of which were reduced in to writing on 13th February 20002. By the said terms, the Respondent No:11 agreed to transfer ownership of the subject properties (clear and marketable) in favor of Respondent No:10 by way of a registered conveyance deed, towards settlement of claim. Accordingly, a conveyance deed was executed by the Receiver appointed by the Hon'ble High Court, Calcutta in favor of Respondent No:10 on 23rd February 2002. In pursuance of the terms of Compromise decree recorded on 14 th February 2002 in OA No:11 of 1999, the said properties were rightly transferred by the Court Receiver on 23 rd March 2002 in favor of Respondent No:10 (Ex.P35). The said transfer is genuine and bonafide transfer for value made by the Respondent No:11 in favor of Respondent No:10. The said deed of conveyance is valid and binding.
106. The Respondent No:10 was not aware of the alleged charge of the Applicant on the said properties and does not admit the same. Even assuming without admitting that the Petitioner Corporation was entitled to any right on the suit property, the same was only upon satisfaction of the claim of the Respondent No:11. There is no proof that the Respondent No:11 who had first charge on the suit properties had satisfied /45/ Com.Misc.No.68/1998 its claim in full and that any amounts were available in balance for payment to the Petitioner Corporation. There has been a conversion of the asset from one form to another i.e. the Respondent No:11 had converted din to money the assets on which it had first charge, assuming without admitting that the Petitioner Corporation had a second charge on the property, and hence it would have no claim on the above said properties.
107. The Respondent No:10 was not aware of purported attachment levied by the Court in the present case. If the applicant is able to prove its charge in respect of the said property the Respondent No:10 reserves its right to initiate appropriate action for fraud against the concerned persons.
108. From the materials available on record it is evident that the properties of Respondent No: 4 to 9 were mortgaged to the Respondent No:11 much prior in point of time to the mortgage created in favor of the Petitioner Corporation. The charge created in favor of Petitioner Corporation is only second and subservient to the charge created in favor of Respondent No:11.
109. The Petitioner Corporation had filed a suit in O.S.No:9697 of 2005 before the City Civil Judge, Bangalore against Respondent Nos. 1, 4 to 11 (including respondent /46/ Com.Misc.No.68/1998 No:10) seeking a declaration that the sale deed executed by the Court Commissioner dated:23 rd March 2002 registered in the office of the Sub-Registrar, Shivaji Nagar, Bangalore Urban District in No.BNG(U)SNGR.138/2002-03 in Book-I-13-13 is not binding on the applicant and for a perpetual injunction restraining Respondent No:1, 10 and 11 not to interfere with mortgaged properties as the same is in the possession of present Court by virtue of Attachment Order dated:22 nd January 1998 against the defendant No:1 to 9. After contest the said suit came to be dismissed vide Judgment and decree dated:02.01.2016 (Ex.R41 and Ex.R42).
110. The Petitioner Corporation had filed G.A.No:2335 of 2004 (O.S.No:264 of 1998) before the Hon'ble High Court of Calcutta. The Hon'ble High Court of Calcutta was pleased to reject the application filed by the Petitioner Corporation by observing that "I only record that Karnataka State Industrial Investment and Development corporation Ltd., was not a party to the suit and therefore, the decree is not naturally binding on them".
111. The Petitioner Corporation is not seeking relief against Respondent No: 1 to 10 by invoking 'marshalling of Securities. The Respondent No:10 has acquired right, title, /47/ Com.Misc.No.68/1998 interest and possession over of "B" to "G" schedule properties by following due process of law. The Petitioner Corporation had not exercised due diligence while advancing financial assistance and creating mortgage of "B" to "G" schedule properties. In view of the orders of the Hon'ble High Court of Calcutta as cited above, the order of attachment passed in favor of Petitioner Corporation in the present proceedings have become in-executable. The Petitioner Corporation is not entitled to proceed against schedule "B" to "G" properties.
112. From the above discussion it is evident that the Petitioner Corporation has established that the Respondent No:1 to 9 are jointly and severally liable to pay ₹.3,76,39,732- 49 as on 31.07.1997 together with interest at 25.5% p.a. from 01.08.1997 on the footing of Compound interest at quarterly rest basis till the date of realization; the Petitioner Corporation is entitled for sale of Schedule A property for realization of its dues and also entitled to execute the decree personally against Respondent No:2. The Petitioner Corporation is not entitled to execute the decree against Schedule "B" to "G" properties belonging to Respondent No:10. Accordingly, POINT No.1 and 3 is answered in the AFFIRMATIVE and POINT No.2 is answered partly AFFIRMATIVE in respect of schedule "A" property.
/48/ Com.Misc.No.68/1998
113. Point No.4: In view of findings on the above points, I pass the following:
ORDER The petition filed by the Petitioner Corporation is hereby allowed in part with cost.
It is hereby declared that a sum of ₹.3,76,39,732-49 (Three Crores Seventy Six Lakhs Thirtynine Thousand Seven Hundred Thirty two and forty nine paise only) as on 31.07.1997 is due to the Petitioner Corporation and the Petitioner Corporation is entitled to recover interest at 25.5% p.a. from 01.08.1997 on the said amount till the date of realization of entire amount;
The Respondent No:2 to 9 are jointly and severally liable to pay the Petitioner Corporation ₹.3,76,39,732-49 (Three Crores Seventy Six Lakhs Thirtynine Thousand Seven Hundred Thirty two and forty nine paise only) as on 31.07.1997 along with interest at 25.5% p.a. from 01.08.1997 on the said amount till the date of realization of entire amount; The Petitioner Corporation is entitled to realize its dues by sale of schedule "A"
/49/ Com.Misc.No.68/1998 property;
The Claim of Petitioner Corporation against Schedule "B" to "G" properties is hereby rejected and consequently the order of attachment passed in respect of schedule "B" to "G" properties stands vacated;
The Petition against Respondent No:10 is hereby dismissed.
Draw decree and issue certificate of recovery accordingly.
The office is hereby directed to send a copy of the judgment to the petitioner/respondents through email as per Order XX Rule 1 CPC as amended by Section 16 of Commercial Courts Act, 2015.
(Dictated to the Stenographer, corrected, signed and then pronounced by me in the open court on 31st day of January 2022) (S.J.KRISHNA) LXXXIX ADDL.CITY CIVIL & SESSIONS JUDGE, BENGALURU.
(CCH-90) ANNEXURES List of witnesses examined for the petitioner:
P.W.1 Sri.B.Yonganda Murthy
/50/
Com.Misc.No.68/1998
P.W.2 Sri. M.Manjunath
List of documents exhibited on behalf of the petitioner:
Sl.No. Description of Documents Exhibit No.
01. Extract of Resolution P1
02. Application made by 1st respondent P2 during 1996
03. Copy of letter dated 22.03.96 from P3 IDBI 04 Copy of letter dated 28.03.96 of 1 st P4 respondent
05. Sanction communication dated P5 31.03.1996
06. No objection certificate dated P6 22.04.1996
07. Guarantee deed dated 23.04.1996 P7 executed by 2nd respondent
08. Loan agreement dated 23.04.1996 Ex.P8 executed by 1st respondent
09. Surety agreement dated 03.05.1996 Ex.P9
10. Copy of the letter dated 26.07.1996 Ex.P10 of the 1st respondent
11. Copy of the letter dated 29.08.1996 Ex.P11 of 1st respondent
12. Copy of the letter dated 16.08.1996 Ex.P12 of 1st respondent
13. Surety agreement executed by 4th to Ex.P13 9th respondents dated 03.05.1996
14. Memorandum of Entry of 4th Ex.P14 respondent dated 03.05.1996
15. Surety agreement dated 03.05.1996 Ex.P.15
16. Memorandum of Entry dated Ex.P.16 03.05.1996 of the 5 respondent th
17. Surety agreement dated 03.05.1996 Ex.P.17 executed by 6th respondent /51/ Com.Misc.No.68/1998
18. Memorandum of Entry of the 6th Ex.P.18 respondent dated 03.05.1996
19. Surety Agreement dated 03.05.1996 Ex.P.19 executed by 7th respondent
20. Memorandum of Entry- 7th respondent Ex.P.20 dated 03.05.1996
21. Surety agreement executed by 8th Ex.P.21 respondent
22. MOU recorded by 8th respondent on Ex.P.22 03.05.1996
23. Surety agreement executed by 9th Ex.P.23 respondent dated 03.05.1996
24. MOU recorded by 9th respondent Ex.P.24 dated 03.05.1996
25. Copy of notice dated 13.08.1997 Ex.P.25
26. Extract of statement of accounts Ex.P.26.
27. Postal acknowledgments Ex.P.27 (a) to (i)
28. Statement of Accounts Ex.P.28
29. Copy of Memorandum of appeal filed Ex.P29 in M.A.No.8/2003 before the DRT
30. Copy of the attachment order and its Ex.P30 enclosures Mis.No:68/98
31. Copy of order dated:09.03.2009 Ex.P31 passed by Hon'ble High Court of Karnataka in W.P.No.278/2009(GM-
CPC)
32. Copy of the Order passed by Hon'ble Ex.P32 High Court of Calcutta in O.S.No:264 of 1998
33. Copy of the Compromise Order Ex.P33 dated:17.08.2000 passed by the Hon'ble High Court of Calcutta in O.S.No:264 of 1998
34. Copy of the registered Sale deed Ex.P34 dated:23.03.2002
35. Copy of the legal notice issued by the Ex.P35 /52/ Com.Misc.No.68/1998 Petitioner The Petitioner has received the original documents as sought in I.A.filed under Order XIII Rule 9(1) r.w.s.151 CPC dated:06.07.2013 by furnishing certified copies. The Petitioner has not returned the original documents.
List of witnesses examined for the respondents:
RW1 : Sri.Ratnesh Sharma List of documents marked for the respondents:
Sl.No. Description of Documents Exhibit No.
01. Copy of the plaint filed in R1 O.S.No:9697/2005
02. Copy of Power of Attorney R2
03. Order sheet dtd.7.12.2007 passed in R3 M.A. No.8/2003 on the file of DRT, Kolkota
04. Two letters dated 18.06.2004 issued R.4 & 5 by Mittal Tower Commercial Complex Owners Association, Bengaluru
05. Two cash receipts dated 16.06.2004 R.6 & 7
06. Certificate issued by Debt Recovery R.8 Tribunal, West Bengal in OA.No.11/1999
07. Six Encumbrance Certificates dated R.9 to 14 15.12.2001 issued by Penal Advocate
08. Two payment receipts issued by R.15 & 16 Senior Sub-Registrar, Shivajinagar, Bengaluru
09. Six Encumbrance Certificates issued b R.17 to 22 y Senior Sub-Registrar, Shivajinagar, Bengaluru
10. Six Encumbrance Certificates issued R.23 to 28 by Panal Advocate
11. Six Encumbrance Certificates issued R29 to 34.
/53/ Com.Misc.No.68/1998 by Senior Sub-Registrar, Shivajinagar, Bengaluru 12 Search Report R35
13. Six Fee receipts R36
14. Letter dated 20.11.2012 R37
15. Certified copy of orders of DRT R.38 & 38(a)
16. Certified copy of Orders of DRT R39 & 39(a)
17. Compromise Order passed in Ex.R40 O.S.No:264 of 1998 by Hon'ble High Court of Calcutta
18. Copy of the Judgment Ex.R41 dated:02.01.2016 passed in O.S.No:9697/2005
19. Copy of decree dated:02.01.2016 Ex.R42 passed in O.S.No:9697/2005 (S.J.KRISHNA) LXXXIX ADDL.CITY CIVIL & SESSIONS JUDGE, BENGALURU.
(CCH-90) ****