Landmark Real Estate Developers ... vs The Malkapur Urban Co-Operative Bank ... on 13 December, 2021

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Bombay High Court

Landmark Real Estate Developers ... vs The Malkapur Urban Co-Operative Bank ... on 13 December, 2021

2. The learned Counsel for the Applicants / Plaintiffs is seeking urgent ad-interim relief in view of the proceedings initiated by the Defendant and for which a statement had been 1/9 21-ial-10943-2021.doc made by the learned Counsel for the Defendant that the proceedings against the Applicants regarding the loan transaction will not be proceeded without giving a fresh notice of two weeks. The fresh notice having been issued, two weeks are said to end by tomorrow. The urgent ad-interim sought is for restraining the Defendant from taking proceedings against the Applicants with regard to the loan transaction.

3. The Applicants had been sanctioned two loans by the Defendant bank on 6th May, 2019. It was mentioned that the frst term loan sanctioned for Rs. 9 Crores was to the Applicant No.1 Company for completion of housing project Viz. Casa Unico and the second term loan sanctioned of Rs. 9 Crores was to Applicant Nos.2 and 3 for repayment of prior debt of State Bank of India. The Applicant No.1 had been disbursed the frst term loan of Rs.9 Crores. However, the Applicant Nos.2 and 3 were not disbursed the term loan of Rs.9 Crores. Under the loan agreement the sum of Rs.9 Crores was disbursed for carrying out civil construction and real estate dealings with regard to Casa Unico. The Applicant No.1 had given collateral security of two properties, one at Karjat, Dist. Raigad and other at Bandra (W), Mumbai. It is stated by the Applicants that 2/9 21-ial-10943-2021.doc these properties were given as collateral security in view of the sanctioned term loan of Rs.18 Crores by the Defendant Bank and which was to be utilized for completion of the housing project namely Casa Unico.

4. The Applicants have stated that in view of the second term loan which was sanctioned for Rs.9 Crores not having been disbursed to the Applicant Nos.2 and 3, the collateral security given to the Defendant Bank by way of registered mortgage deed of the two properties were fraudulently obtained. The valuation of the two properties by Defendant bank's valuer itself shows that the two properties are valued at Rs.47 Crores and one property was suffcient for being given as collateral security towards the loan disbursement of Rs.9 Crores. The Applicants further case is that the total term loan sanctioned was for Rs.18 Crores and that the Defendant bank having failed to disburse the agreed loan amount of Rs.18 Crores which was towards the project Casa Unico, has fraudulently entered into the loan agreements with the Applicants under which the collateral security for both properties were provided by way of registered mortgage. 3/9

21-ial-10943-2021.doc

5. The Suit has been fled for a declaration that the two loan agreements are vitiated by fraud, misrepresentation and be cancelled. Further declaration has been sought that the mortgage deeds dated 1st June, 2019 registered before the Sub Registrar of Assurance in respect of the Karjat property and the Bandra property are vitiated by fraud and misrepresentation and ought to be cancelled by the Defendant No.2. Further relief has been sought for injunction restraining Defendant No.2 acting upon the loan agreements and the mortgage deeds.

6. The learned Counsel for the Plaintiff has submitted that inspite of the second term loan sanctioned, the Defendant bank failed to disburse the sum of Rs.9 Crores to the Applicant Nos.2 and 3 who are the shareholders of Applicant No.1 and Applicant No.2 is the director of Applicant No.1 and which loan was to be utilized towards completion of the housing project namely Casa Uncio. The Defendant Bank has fraudulently obtained the mortgage of two valuable properties which as per the Defendants own valuer is valued at a sum of Rs.47 Crores. The Defendant is now seeking to execute the mortgage by way of attachment and is proceeding against the Applicants. He has, 4/9 21-ial-10943-2021.doc therefore, submitted that ad-interim relief be granted to restrain the Defendant Bank from proceeding against the Applicant No.1 in respect of the frst loan agreement and / or attaching the properties of the Applicants.

7. The learned Counsel appearing for the Defendant has submitted that as per the loan agreement executed in May, 2019, the Applicant No.1 was granted term loan of Rs.9 Crores which was repayable by the Applicant No.1 by way of monthly installment of Rs.22,00,000/- payable from December, 2019 onwards. The term loan was for 60 months with six month moratorium period. It was further provided that the Applicant No.1 shall be liable to pay monthly interest during the moratorium period. He has submitted that Applicant No.1 failed to make any payment of monthly interest during the moratorium period and / or make any repayment towards the term loan of Rs.9 Crores which was repayable from December, 2019 onwards.

8. The learned Counsel for the Defendant has further relied upon the letter dated 15th May, 2019 addressed by the Applicant No.1 wherein, he has expressly brought to the notice 5/9 21-ial-10943-2021.doc of the Defendant Bank that amount of Rs.9 Crores which was disbursed by the Defendant Bank will be frst utilized by Applicant No.1 for repayment of existing loan of State Bank of India and then for development and construction of the housing project namely Casa Unico being developed by Applicant No.1. He has submitted that it is in light of such representation that the Defendant Bank had disbursed term loan of Rs.9 Crores directly to the State Bank of India. He has submitted that in view of the Applicant No.1 not having honoured its obligations under the loan agreement by making any repayment of term loan of Rs.9 Crores including the interest amount which was payable during the moratorium period, the Defendant had sought to take proceedings against the Plaintiff No.1 for repayment of the term loan. He has submitted that mortgage deeds were executed by Applicant No.1 as collateral security for the term loan of Rs.9 Crores.

9. The learned Counsel for the Defendant has further submitted that it was due to the defaults of the Applicant No.1 in making repayment of term loan that the Defendant Bank had thought it ft not to disburse any further loans to the Applicant Nos.2 and 3 who are shareholders of Applicant No.1 and 6/9 21-ial-10943-2021.doc Applicant No.2 is the director of the Applicant No.1. He has also relied upon the notice issued by Reserve Bank of India dated 24th November, 2021, which had directed the Defendant Bank not to incur or extinguish any other liability unless specifcally approved in writing by the RBI. He has submitted that in the light of this factual position, no case is made out for ad-interim relief to be granted.

10. The learned Counsel appearing for the Applicant to counter the arguments of the learned Counsel for the Defendant has relied upon the letter dated 31st December, 2019 issued by the Defendant No.1 Bank which had informed the Applicant Nos.2 and 3 that they are unable to disburse the sanctioned second term loan amount of Rs.9 Crores and that the decision is taken in the backdrop of adverse fnancial ratio. He has submitted that the non-disbursement of the second term loan was not on account of the Applicant No.1 failing to make repayment of the frst term loan but on account of adverse fnancial ratio of the Defendant Bank.

11. Having considered the submissions, it appears that the second term loan of Rs.9 Crores had not been 7/9 21-ial-10943-2021.doc disbursed by the Defendant Bank inspite of sanctioning it. The purpose of both term loans is contended by the Applicants to be for completion of the housing project namely Casa Unico. Further, the Applicants have contended that the mortgage of the two properties as and by way of collateral security by execution of the mortgage deeds was not only towards frst term loan of Rs.9 Crores but had in fact been given for both the sanctioned term loans of Rs.18 Crores which were to be disbursed by the Defendant bank.

12. It is noted that proceedings being initiated by the Defendant Bank is on account of Applicant No.1 failing to make any payment of the interest amount during the moratorium period as well as repayment of the loan amount from December, 2019 onwards as provided in the loan agreement executed in May, 2019. At this stage, it would not be possible to restrain the Defendant Bank from proceeding against the Applicants particularly considering that the Applicants have in fact not made any repayment of the term loan of Rs.9 Crores, as provided under the said loan agreement. Hence, ad-interim order sought for by the Plaintiffs at this stage cannot be granted. The Interim Application will 8/9 21-ial-10943-2021.doc necessarily have to be heard, particularly considering that the Plaintiffs in the suit have alleged fraud in execution of the loan agreements as well as the mortgage deeds.

13. The Interim Application shall be placed on 13th January, 2022 for hearing. The Interim Application (L) No.22329 of 2021 which seeks rejection of Plaint under Order 7 Rule 11 (d) of the CPC shall also listed on that date.

[R.I. CHAGLA J.] 9/9

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Bombay High Court