WRITTEN NOTES OF ARGUMENT ON BEHALF OF THE DEFENDANTS - OA Application - DRT Siliguri

 

IN THE DEBTS RECOVERY TRIBUNAL SILIGURI

PCM Tower, 2^nd Floor, 2 no.Mile, Sevoke Road, Siliguri - 734001.

 

ORIGINAL APPLICATION NO. 15 OF 2024

{ Diary no. 396/2023 }

 

PUNJAB NATIONAL BANK

--- ---- APPLICANT

– VERSUS –

 

M/S. H. M. ENTERPRISE AND OTHERS

----- ---- RESPONDENTS

 

WRITTEN NOTES OF ARGUMENT ON BEHALF OF THE DEFENDANTS

 

I. INTRODUCTORY SUBMISSION

 

1. The present Original Application has been instituted by the Applicant/Punjab National Bank seeking recovery of a sum of Rs.95,63,554.87/-, together with further interest, allegedly arising out of four different credit facilities, namely:

a. Car Loan Account No. 0822300036944 – Rs.4,98,318/-;

b. Term/Housing Loan Account No. 0700306734640 – Rs.22,74,095.87/-;

c. Cash Credit Account No. 0700250032294 – Rs.62,62,981/-; and

d. GECL/COVID Loan Account No. 0700306740359 – Rs.5,28,160/-.

The Bank claims the aforesaid amount as outstanding as on 30.11.2023 and seeks further interest from 01.12.2023 till realization. The above figures are taken directly from the Applicant Bank's own Original Application.

 

2. The Applicant Bank relies upon several loan applications, sanction letters, demand promissory notes, hypothecation documents, guarantees, mortgage documents, statements of accounts, the alleged Section 13(2) SARFAESI demand notice, track reports and valuation report. The index of the OA shows that the Bank has relied upon separate documentation for the car loan, housing loan, cash-credit facility and COVID/GECL facility.

 

3. The Defendants, however, have consistently disputed the Bank's claim in substance and have specifically raised objections concerning:

i. the very constitution and existence of Defendant No.1 as a partnership concern;

ii. the alleged status of Defendant Nos.2 and 3 as partners;

iii. the actual disbursement and utilization of the alleged loan facilities;

iv. the correctness of the outstanding amounts;

v. the alleged conduct and transactions of the concerned Bank officials;

vi. payment/adjustment of earlier loan liabilities;

vii. the correctness and legality of the Bank's recovery proceedings;

viii. the effect of the earlier SARFAESI proceedings and judgment dated 29.07.2024;

ix. the service and validity of the Section 13(2) demand notices;

x. the effect of the COVID-19 regulatory measures and moratorium;

xi. the correctness of the Bank's statements of account and interest calculation; and

xii. the Bank's entitlement to obtain a recovery certificate for the entire amount claimed.

 

4. It is respectfully submitted that the Applicant Bank, being the claimant, bears the primary burden of establishing by legally admissible evidence the existence of an enforceable debt, the precise amount legally due, the contractual basis for interest and the liability of each individual Defendant.

 

II. SYNOPSIS OF THE APPLICANT BANK'S ORIGINAL APPLICATION

 

5. According to the Original Application, the Bank's case commenced with a car-loan transaction in July/August 2017. The Bank alleges that Defendant Nos.2 and 3 applied for a car loan on 31.07.2017 and that the loan was sanctioned on 01.08.2017. The Bank further relies upon the registration certificate and hypothecation of the vehicle in its favour.

 

6. The Bank thereafter alleges that Defendant No.2 obtained a housing loan. The housing loan application was allegedly submitted on 01.11.2017, sanctioned on 18.11.2017 and supported by various loan documents.

 

7. The Bank further alleges that Defendant No.2 created/extended an equitable mortgage by deposit of original Title Deed No. I-2179 of 2000.

 

8. According to the Bank, a Cash Credit facility of Rs.40,00,000/- was sanctioned on 01.08.2018 to Defendant No.1, allegedly represented by Defendant Nos.2 and 3 as partners, and the Defendants executed loan and guarantee documents.

 

9. The Bank further alleges that a PNB COVID-19/GECL loan of Rs.4,00,000/- was sanctioned on 04.05.2020 in favour of Defendant No.1 through Defendant Nos.2 and 3.

 

10. The Bank alleges issuance of a demand notice under Section 13(2) of the SARFAESI Act on 02.07.2021 and subsequently relies upon its recovery measures.

 

11. The Bank subsequently obtained a valuation report dated 11.03.2023 and calculated the alleged outstanding dues at Rs.95,63,554.87/- as on 30.11.2023.

 

12. The Applicant Bank consequently seeks a recovery certificate for the aforesaid amount with further interest.

 

III. CASE OF THE DEFENDANT NO. 2

 

13. Defendant No.2, Hasna Bewa, in her Written Statement, has denied the material allegations of the OA and has challenged the maintainability and factual correctness of the Bank's claim.

 

14. The Defendant No.2 specifically pleaded that she had previously availed various smaller loans from the Bank for her business and had repaid those loans in time. She relied upon certificates of closure of earlier loan accounts.

 

15. Defendant No.2 specifically pleaded that when she sought a larger loan of Rs.40,00,000/-, she had existing loan accounts which, according to her, were required to be closed. She alleged that the concerned Bank official instructed her to issue three cheques aggregating approximately Rs.12,00,000/- and represented that the existing accounts would be closed.

 

16. She further alleged that the original title deed deposited with the Bank was not returned despite her assertion that the corresponding liability had been discharged, and alleged that she was instructed by a Bank official not to disclose the matter.

 

17. More seriously, Defendant No.2 alleged several personal monetary transactions involving Bank officials, including alleged payment of Rs.3,00,000/-, subsequent amounts aggregating Rs.8,00,000/-, Rs.2,00,000/- towards another proposed facility, and an alleged payment relating to a Gold Bond. She further alleged that substantial amounts were not credited to her loan accounts.

 

18. Defendant No.2 also alleged payment of Rs.15,00,000/- which, according to her, was neither returned nor credited to her loan account, payment of Rs.16,000/- towards medical/Mediclaim-related services, and another alleged payment of Rs.14,00,000/- in connection with booking of a flat.

 

19. Defendant No.2 further relied upon the alleged discrepancies in the Bank's recovery notices, particularly the difference between the amount of Rs.18,83,206.87/- and Rs.69,27,691.87/- appearing in the recovery material.

 

20. Defendant No.2 specifically asserted that she regularly paid EMI up to May 2020 through ECS and relied upon bank statements in support of the said contention.

 

21. The Defendant further pleaded the effect of the RBI COVID-related regulatory measures and moratorium and relied upon the RBI circular dated 27.03.2020.

 

IV. CASE OF DEFENDANT NOS. 1 AND 3

 

22. Defendant Nos.1 and 3 adopted substantially the same defence and specifically disputed the allegation that Defendant Nos.2 and 3 knowingly constituted or acted as partners of M/s. H.M. Enterprise.

 

23. Their Written Statement alleges that the partnership concern shown in the Bank's documents was a creation/consequence of acts of Bank officials and that the Defendants, being rustic persons, had acted on the instructions of Bank officials.

 

24. Defendant Nos.1 and 3 challenged the OA on the grounds of maintainability, absence of cause of action, absence of lawful claim, competence of the person filing the OA, suppression of material facts and non-joinder/mis-joinder.

 

25. They also relied upon the earlier loan closure documents, payment of EMI, the RBI COVID circular, the recovery notice dated 09.04.2021, the possession notice and the judgment dated 29.07.2024 passed in S.A. Nos.26 of 2022 and 27 of 2022.

 

V. EFFECT OF THE BANK'S REJOINDERS

 

26. The Applicant Bank, in its rejoinder, has substantially denied the allegations of the Defendants and repeatedly characterized the defence as an afterthought.

 

27. The Bank's principal response is that the loan documents were executed by the Defendants, that Defendant Nos.2 and 3 signed documents as partners, and that the Bank's statements of account establish the outstanding liability.

 

28. In relation to Defendant No.2's allegations against Bank officials, the Bank's rejoinder is essentially one of denial and puts the Defendants to strict proof. The Bank asserts that there was no contemporaneous complaint or acknowledgment and that the alleged transactions were not within the Bank's knowledge.

 

29. In respect of the title deed, the Bank maintains that the deed could not be returned until the entire outstanding liability was liquidated.

 

30. With regard to the SARFAESI proceedings, the Bank contends that the earlier DRT proceedings did not extinguish the debt and that the present OA is supported by the Section 13(2) notice and track report which, according to the Bank, were not produced in the earlier SARFAESI proceedings.

 

31. The Bank also specifically contends that the earlier DRT judgment merely dealt with the procedural defect relating to service of the Section 13(2) notice and permitted the secured creditor to initiate fresh SARFAESI measures.

 

VI. QUESTIONS WHICH ARISE FOR DETERMINATION

 

32. Upon consideration of the pleadings, the following principal questions arise:

A. Whether the Applicant Bank has proved the existence of a legally enforceable debt against each Defendant?

B. Whether the Bank has proved actual disbursement and utilization of each of the four loan facilities forming the basis of the OA?

C. Whether the alleged partnership status of Defendant Nos.2 and 3 and the liability of Defendant No.3 as partner/guarantor have been established by legally admissible evidence?

D. Whether the statements of account filed by the Bank correctly reflect all debits, credits, repayments, interest and charges?

E. Whether the Bank has established the precise amount of Rs.95,63,554.87/- as legally recoverable?

F. Whether the Bank has satisfactorily explained the discrepancies in the amounts appearing in the SARFAESI/recovery notices?

G. What is the legal effect of the judgment dated 29.07.2024 in S.A. Nos.26 and 27 of 2022?

H. Whether the Bank is entitled to claim contractual and further interest in the manner pleaded?

I. Whether the Bank has complied with all statutory and contractual requirements necessary for issuance of a recovery certificate?

 

VII. THE BANK MUST PROVE THE DEBT, NOT MERELY THE EXISTENCE OF LOAN DOCUMENTS

 

33. The fundamental issue in an OA under Section 19 of the RDB Act is not merely whether some loan documents exist, but whether a legally recoverable debt in the precise amount claimed exists against the Defendants.

 

34. The Bank has relied heavily upon sanction letters, demand promissory notes, guarantee documents and statements of account. However, execution of a sanction document by itself does not conclusively establish:

a. the exact amount actually disbursed;

b. the date of each disbursement;

c. the purpose for which each amount was disbursed;

d. whether amounts were transferred to another loan account;

e. whether any amount was adjusted towards earlier liabilities;

f. whether all repayments were duly credited;

g. whether interest was correctly calculated; and

h. whether penal interest, charges or other debits were contractually and legally permissible.

 

35. The Bank therefore has to establish the complete chain:

Sanction → Documentation → Disbursement → Operation of Account → Repayment/Credit → Default → NPA → Recall → Outstanding Balance → Interest Calculation.

 

36. The Defendants respectfully submit that unless the entire chain is proved, a recovery certificate for the entire amount claimed cannot mechanically be issued.

 

VIII. FOUR DIFFERENT LOAN ACCOUNTS CANNOT BE TREATED AS ONE UNEXAMINED COMPOSITE LIABILITY

 

37. The Bank's claim comprises four separate accounts and the Bank itself has disclosed four distinct outstanding figures.

 

38. Each account therefore requires independent proof.

 

39. In particular, the Bank is required to establish separately:

a. the sanction amount;

b. the actual disbursement;

c. the repayment schedule;

d. the dates and amounts of repayments;

e. the date of default;

f. the date of NPA classification;

g. the date of recall;

h. the principal outstanding;

i. the accrued interest;

j. penal/additional interest;

k. other charges; and

l. the final balance.

 

40. A consolidated figure of Rs.95,63,554.87/- cannot substitute for account-wise proof.

 

41. The Bank's own rejoinder admits that certain loan accounts referred to by the Defendants were separate accounts and had no connection with the present proceeding.

 

42. This itself demonstrates the importance of strict account-wise identification and proof.

 

IX. MATERIAL DISCREPANCIES IN THE BANK'S RECOVERY MATERIAL

 

43. The Defendants specifically relied upon the discrepancy between the amount of Rs.18,83,206.87/- and Rs.69,27,691.87/- appearing in the recovery material.

 

44. Such discrepancy cannot be brushed aside merely by saying that the Defendants have made an allegation.

 

45. Once a borrower specifically identifies two materially different figures purportedly issued by the secured creditor in relation to recovery of the same secured property/loan facilities, the Bank must satisfactorily explain:

i. the date of each statement;

ii. the loan account/account numbers covered;

iii. the principal component;

iv. the interest component;

v. whether multiple accounts were clubbed;

vi. whether any amount was subsequently adjusted;

vii. whether the notices related to different facilities; and

viii. how the present figure of Rs.95,63,554.87/- has been arrived at.

 

46. The Tribunal may therefore be pleased to insist upon a transparent account-wise reconciliation before accepting the Bank's final claim.

 

X. SARFAESI JUDGMENT DATED 29.07.2024 IS A MATERIAL CIRCUMSTANCE

 

47. The Defendants specifically relied upon the common judgment dated 29.07.2024 passed by the Hon'ble DRT, Siliguri in S.A. Nos.26 of 2022 and 27 of 2022.

 

48. The Written Statement records that the earlier SAs challenged the Bank's possession notices in respect of Account Nos.0700250032294 and 0700306734640.

 

49. According to the Defendants' pleading, the earlier Tribunal found that the possession measures were initiated without proper service of the Section 13(2) notice and consequently set aside the possession notice dated 05.11.2021, while granting liberty to the secured creditor to initiate SARFAESI measures afresh.

 

50. The Bank's own rejoinder substantially acknowledges the procedural finding in the earlier proceedings, while contending that in the present OA it has subsequently filed a copy of the Section 13(2) notice and track report.

 

51. Therefore, the earlier judgment is undoubtedly a material piece of evidence concerning the Bank's conduct in the recovery process.

 

52. The Defendants respectfully submit that the Bank cannot simply rely upon the subsequent filing of a track report to avoid scrutiny of:

a. whether the notice was actually served;

b. upon whom it was served;

c. on what date it was served;

d. whether the notice correctly described the account;

e. whether the amount demanded therein corresponds with the present OA claim;

f. whether the statutory period was properly allowed; and

g. whether the subsequent recovery measures were founded upon a valid demand.

 

53. The earlier judgment may not by itself extinguish the underlying debt, but it materially affects the credibility and evidentiary foundation of the Bank's recovery narrative and requires strict scrutiny of the Bank's subsequent documents.

 

XI. THE BANK'S OWN REJOINDER SHOWS THAT SERVICE OF NOTICE IS A MATERIAL ISSUE

 

54. The Bank has attempted to distinguish the earlier SARFAESI proceedings by stating that it has now produced a track report.

 

55. This very stand demonstrates that service is a material factual issue.

 

56. The Defendants respectfully submit that production of a track report should not automatically be treated as conclusive proof of service unless the report is properly proved and the relevant postal/consignment particulars correspond with the notice, addressee and date.

 

57. The Bank must therefore establish the evidentiary link between the notice → correct addressee → correct address → dispatch → delivery/attempted delivery → date of delivery → statutory consequence.

 

XII. THE ALLEGED PARTNERSHIP OF DEFENDANT NOS. 2 AND 3 REQUIRES PROOF

 

58. Defendant Nos.1 and 3 specifically disputed that M/s. H.M. Enterprise was knowingly constituted as a partnership concern and alleged that the Bank officials had created the partnership structure.

 

59. The Bank's answer is that the Defendants signed various loan documents as partners and affixed the partnership rubber stamp.

 

60. The controversy therefore cannot be resolved merely by assertion.

 

61. The Bank must prove the documents upon which it relies, including:

a. partnership deed, if any;

b. partnership application, if any;

c. KYC records;

d. account-opening documents;

e. specimen signatures;

f. statutory/registration records, if relied upon;

g. sanction documents;

h. guarantee documents; and

i. contemporaneous correspondence.

 

62. If the Bank seeks to fasten personal liability upon Defendant Nos.2 and 3, it must establish the precise legal capacity in which each Defendant executed each document.

 

63. The mere description of a person as "partner" in a bank-generated document cannot, by itself, conclude a disputed question of fact where the status itself has been specifically challenged.

 

XIII. SECTION 69 OF THE PARTNERSHIP ACT — WITHOUT PREJUDICE

 

64. The Defendants have raised the issue concerning the alleged unregistered partnership firm and Section 69 of the Indian Partnership Act, 1932.

 

65. The Applicant Bank has replied that Section 69 restricts an unregistered firm from suing to enforce contractual rights but does not prevent a creditor from proceeding against an unregistered partnership firm for recovery.

 

66. The Defendants respectfully submit that this question may not be treated as the sole or principal defence. The more fundamental issue remains whether the Bank has proved the debt, liability, partnership status, guarantee, disbursement and quantum against the respective Defendants.

 

67. The Defendants reserve all rights in respect of the statutory effect of Section 69 and the legal capacity/liability of the parties, but respectfully submit that the Bank cannot succeed merely because it possesses loan documentation unless the foundational facts are proved.

 

XIV. THE ALLEGED PAYMENTS AND CONDUCT OF BANK OFFICIALS REQUIRE PROPER APPRAISAL

 

68. Defendant No.2 has made serious allegations against particular Bank officials concerning receipt of cash/cheques and alleged promises to credit or adjust amounts in her loan accounts.

 

69. The Bank has responded essentially by denying knowledge and requiring the Defendant to prove those allegations.

 

70. The Defendants respectfully submit that these allegations cannot simply be rejected as "afterthought" merely because the Bank denies them.

 

71. Where the Bank possesses the primary records relating to operation of loan accounts, deposits, transfers, credits, debits, cash transactions and adjustment of loan proceeds, the Tribunal should examine the Bank's own records to determine whether the alleged amounts were credited, withdrawn, transferred or otherwise dealt with.

 

72. The Defendants accordingly submit that the following records assume importance:

i. complete account statements;

ii. vouchers;

iii. cash scrolls;

iv. transfer entries;

v. transaction journals;

vi. loan disbursement records;

vii. adjustment entries;

viii. maker-checker records;

ix. CBS transaction history; and

x. relevant correspondence.

 

73. The Bank cannot discharge its burden merely by stating that the alleged transactions were outside its knowledge if the transactions, if genuine, ought to be reflected in the Bank's books and electronic records.

 

XV. PAYMENT OF EMI UP TO MAY 2020 IS A MATERIAL FACT

 

74. Defendant No.2 specifically pleaded that she regularly paid EMI through ECS and that payments continued up to May 2020. She relied upon bank statements in support thereof.

 

75. The Bank disputes the assertion and relies upon its own statement of account to say that the Defendant failed to pay EMI according to the sanction terms.

 

76. The issue therefore becomes a pure question of documentary accounting evidence.

 

77. The Tribunal may kindly compare:  Defendants' bank statement + ECS entries + Bank's loan account + repayment schedule + interest calculation.

 

78. If payments have been received by the Bank but not properly adjusted, the outstanding claim necessarily requires recalculation.

 

79. The Defendants therefore submit that the Bank's statement of account should not be accepted mechanically merely because it bears a certificate; the underlying entries must be consistent with the actual transactions.

 

XVI. COVID-19 MORATORIUM AND REGULATORY MEASURES

 

80. Defendant No.2 has specifically relied upon the RBI regulatory measures and moratorium announced during the COVID-19 period.

 

81. The Bank's rejoinder states that the RBI circular permitted a moratorium for specified instalments and contends that its later SARFAESI notice did not violate the circular.

 

82. The Defendants respectfully submit that the issue should be examined not merely by reference to the date of the SARFAESI notice, but by examining whether the Bank correctly implemented the applicable regulatory measures in the loan accounts, including:

a. treatment of instalments;

b. moratorium period;

c. interest treatment;

d. capitalization, if any;

e. NPA classification;

f. restructuring/relief, if applicable; and

g. subsequent recovery calculations.

 

83. The Bank should therefore be directed to produce the account-wise calculation showing the effect of the applicable COVID-period regulatory measures.

 

XVII. NPA CLASSIFICATION AND DEFAULT MUST BE PROVED

 

84. The Defendants specifically disputed the correctness of the Bank's assertion that the loan accounts had become NPAs and challenged the subsequent recovery measures.

 

85. The Bank has responded that an account becomes NPA according to the applicable banking norms and that there was no requirement for a separate pre-NPA intimation.

 

86. The Defendants submit that the Tribunal is nevertheless entitled to examine the actual date of NPA classification because that date is relevant to:

i. the cause of action;

ii. recall of the facility;

iii. calculation of interest;

iv. limitation;

v. SARFAESI measures; and

vi. the final outstanding balance.

 

87. The Bank should therefore establish the NPA date from the original CBS/account records rather than by a mere assertion in pleadings.

 

XVIII. LIMITATION — THE BANK MUST ESTABLISH THE COMPLETE CAUSE OF ACTION

 

88. The issue of limitation has been raised in the pleadings and denied by the Applicant Bank. The Bank's rejoinder states that the OA is not barred by limitation.

 

89. The Defendants submit that the question of limitation cannot be decided in isolation from the actual account history.

 

90. The Tribunal should examine:

a. date of sanction;

b. date of actual disbursement;

c. contractual repayment dates;

d. date of last payment;

e. date of default;

f. date of NPA;

g. date of recall;

h. any acknowledgment of liability;

i. any valid payment capable of extending limitation; and

j. date of institution of the OA.

 

91. Particularly where the Bank relies upon separate loan accounts, limitation must be considered account-wise and not merely on the basis of a general statement that the OA was filed within time.

 

92. The Defendants therefore submit that the Applicant Bank must establish the limitation-saving events, if any, by documentary evidence.

 

XIX. STATEMENTS OF ACCOUNT REQUIRE STRICT SCRUTINY

 

93. The entire monetary claim substantially rests upon the statements of account produced by the Applicant Bank.

 

94. The Defendants respectfully submit that a statement of account cannot be treated as conclusive proof merely because it is maintained by a Bank.

 

95. The Tribunal should examine whether the statements disclose:

i. opening balance;

ii. sanctioned limit;

iii. actual disbursement;

iv. each debit;

v. each credit;

vi. interest rate;

vii. penal interest;

viii. charges;

ix. payments received;

x. adjustments;

xi. date of NPA; and

xii. closing balance.

 

96. The Bank's claim of Rs.95,63,554.87/- should therefore be subjected to a complete account-wise reconciliation.

 

97. Any unexplained debit, charge, capitalization or interest component must be excluded from the recovery certificate unless proved to be contractually and legally recoverable.

 

XX. INTEREST CANNOT BE GRANTED AS A MATTER OF COURSE

 

98. The Bank seeks contractual interest from 01.12.2023 and further interest till realization.

 

99. The Defendants submit that interest must follow the contractual terms and applicable law.

 

100. The Bank must establish:

a. agreed rate of interest;

b. basis of variation;

c. applicable MCLR/benchmark, if any;

d. date-wise rate changes;

e. penal interest clause;

f. capitalization of interest;

g. RBI directions applicable to the respective facility; and

h. precise computation.

 

101. The Tribunal may therefore restrict interest to such amount as is proved by the contractual documents and applicable law and may disallow any unsupported or excessive component.

 

XXI. EQUITABLE MORTGAGE DOES NOT PROVE THE QUANTUM OF DEBT

 

102. The Bank relies upon the equitable mortgage allegedly created by deposit of Title Deed No.I-2179 of 2000. The Bank's own rejoinder acknowledges the existence of the mortgage.

 

103. The Defendants submit that the existence of security is not equivalent to proof of the debt.

 

104. A mortgage is security for an underlying liability. The Bank must first establish the underlying enforceable liability and the precise amount due.

 

105. The existence of a mortgage cannot cure deficiencies in proof of disbursement, account operation, repayment, interest calculation or quantum.

 

XXII. THE EARLIER SARFAESI PROCEEDING DOES NOT AUTOMATICALLY PROVE THE BANK'S PRESENT CLAIM

 

106. The Defendants do not merely rely upon the earlier SARFAESI judgment to contend that the entire debt stands extinguished.

 

107. Their principal submission is that the earlier proceedings expose material procedural and evidentiary deficiencies in the Bank's recovery process.

 

108. The Bank itself states that in the earlier SARFAESI proceeding it could not produce the relevant notice/track report, whereas it now relies upon those materials in the present OA.

 

109. Consequently, the Tribunal must independently determine whether the present documents are duly proved and whether they establish the debt claimed.

 

110. The liberty granted by the earlier DRT judgment to initiate SARFAESI measures afresh cannot be construed as a judicial finding that the Bank's present monetary claim of Rs.95,63,554.87/- stands proved.

 

XXIII. THE BANK CANNOT SHIFT ITS ENTIRE BURDEN UPON THE DEFENDANTS

 

111. A recurring feature of the Bank's rejoinders is the assertion that the Defendants are "solely responsible to prove" the allegations made by them.

 

112. The Defendants respectfully submit that while the party making a particular affirmative allegation may have an evidentiary burden in respect thereof, this principle does not relieve the Applicant Bank of its primary obligation to establish the ingredients of its own claim.

 

113. The Bank must first prove: debt + liability + disbursement + default + quantum + interest + enforceability.

 

114. Only thereafter does the question arise whether any specific defence or set-off/adjustment pleaded by the Defendants has been established.

 

115. The Bank cannot succeed merely by pointing to alleged deficiencies in the Defendants' proof.

 

XXIV. THE BANK'S DESCRIPTION OF THE DEFENCE AS "AFTERTHOUGHT" IS NOT PROOF

 

116. The Bank has repeatedly described the Defendants' allegations as "afterthought", "malafide" and intended to cause wrongful loss to the Bank.

 

117. Such characterization is not evidence.

 

118. The Tribunal is required to adjudicate upon the documents, account statements, notices, repayment records and other evidence, rather than upon labels employed by either side.

 

119. The allegations of the Defendants may succeed or fail only upon proof, but they cannot be rejected merely because the Applicant Bank describes them as afterthoughts.

 

XXV. DEFENDANTS' DOCUMENTARY MATERIAL REQUIRES CONSIDERATION

 

120. Defendant No.2 filed, inter alia:

a. certificates of closure of earlier loan accounts;

b. complaints to the Police and Bank authorities;

c. sanction letter dated 18.11.2017;

d. bank statements showing EMI payments;

e. sanction letter dated 01.08.2018;

f. recovery recall notice dated 09.04.2021;

g. RBI circular dated 27.03.2020;

h. possession notice dated 05.11.2021 and publications; and

i. DRT judgment dated 29.07.2024.

These documents are specifically indexed in the Written Statement of Defendant No.2.

 

121. Defendant Nos.1 and 3 have similarly relied upon the same categories of documentary evidence.

 

122. These documents must be considered cumulatively rather than separately.

 

XXVI. THE DEFENDANTS' CASE IS THAT THE BANK'S CLAIM REQUIRES RECONCILIATION

 

123. The Defendants respectfully submit that the present case is not a case where the Defendants merely deny having dealings with the Bank.

 

124. On the contrary, the pleadings acknowledge several historical dealings with the Bank, earlier loans, repayment of earlier facilities, the housing facility, the cash-credit facility and the existence of mortgage-related documents.

 

125. The real dispute is: what amount was actually disbursed, what amount was actually repaid, what amount was properly adjusted, what amount remains due, and whether the amount claimed in the OA has been correctly calculated.

 

126. This distinction is crucial.

 

127. The existence of a banking relationship cannot itself justify a recovery certificate for the precise sum claimed.

 

XXVII. RELIEF AGAINST EACH DEFENDANT MUST BE SEPARATELY CONSIDERED

 

128. The Applicant Bank has sought recovery against Defendant Nos.1, 2 and 3, while also relying upon partnership liability, personal guarantees and mortgage security.

 

129. The Tribunal should therefore determine separately:

a. liability of Defendant No.1 as borrower;

b. liability of Defendant No.2 as alleged partner/borrower/guarantor;

c. liability of Defendant No.3 as alleged partner/guarantor; and

d. enforceability and extent of the mortgage/security.

 

130. The Bank cannot obtain a composite certificate against all Defendants without establishing the legal foundation of the liability of each Defendant.

 

XXVIII. DEFENCE TO THE BANK'S CONTENTION REGARDING GENERAL POWER OF ATTORNEY

 

131. The Bank states that its Chief Manager instituted the OA under authority of a General Power of Attorney and that the relevant authority document has been filed.

 

132. The Defendants submit that the question of authority should be determined strictly on the basis of the actual power of attorney/authorization placed on record, its scope and the authority of the concerned officer to institute and depose in the present proceedings.

 

133. The Defendants therefore do not concede the issue merely on the basis of an assertion in the rejoinder and reserve their right to challenge the same to the extent permissible from the record.

 

XXIX. PRINCIPAL DEFENCE — FAILURE TO PROVE THE EXACT CLAIM

 

134. Ultimately, the Applicant Bank seeks a money recovery certificate.

 

135. Therefore, the decisive question is not whether the Bank had some dealings with the Defendants, but whether the Bank has proved the exact sum legally recoverable.

 

136. The Defendants respectfully submit that where:

i. different amounts appeared in recovery notices;

ii. the earlier SARFAESI proceedings resulted in setting aside of possession measures;

iii. service of Section 13(2) notices was disputed;

iv. EMI payments were asserted and documentary statements relied upon;

v. the constitution of the partnership was disputed;

vi. separate loan accounts are involved;

vii. the Bank itself distinguishes unrelated loan accounts;

viii. alleged payments/adjustments are disputed;

ix. COVID-period regulatory measures are relied upon; and

x. the Bank has not, according to the Defendants, furnished a satisfactory account-wise reconciliation,

the claim cannot be decreed mechanically for the entire amount.

 

XXX. WITHOUT PREJUDICE — NEED FOR ACCOUNT-WISE RECONCILIATION

 

137. Without prejudice to the principal contention that the OA is liable to be dismissed, the Defendants submit that, if this Hon'ble Tribunal is not inclined to dismiss the OA outright, the Applicant Bank should at the minimum be directed to furnish a comprehensive account-wise reconciliation.

 

138. Such reconciliation should contain:

Particular	Requirement
Sanctioned amount	Exact sanction
Actual disbursement	Date and amount
Repayment	Date-wise
Interest	Rate-wise
Penal interest	Separately shown
Charges	Particular-wise
NPA date	Account-wise
Recall date	Account-wise
Credits/adjustments	Complete details
Closing balance	As on 30.11.2023
Further interest	Correct contractual basis

 

139. Until such reconciliation is made and proved, the claimed sum of Rs.95,63,554.87/- ought not to be treated as conclusively established.

 

XXXI. CONCLUSION

 

140. The Applicant Bank has essentially based its case upon loan documentation and statements of account. The Defendants, however, have raised substantial and specific factual and legal disputes touching upon the very foundation and quantum of the claim.

 

141. The earlier SARFAESI proceedings and judgment dated 29.07.2024 constitute a significant part of the factual background. The Bank itself acknowledges that the earlier proceedings involved the issue of service of the Section 13(2) notice and that it now relies upon a track report in the present OA.

 

142. The Defendants respectfully submit that the earlier judgment cannot be treated as an adjudication in favour of the Bank on the present monetary claim. The Bank must independently establish the debt and quantum in the present proceeding.

 

143. The Bank's claim for Rs.95,63,554.87/- therefore requires strict scrutiny, particularly in view of the separate loan accounts, disputed repayments, disputed transactions, discrepancies in recovery notices, disputed partnership status, SARFAESI history and the alleged COVID-period irregularities.

 

144. The Defendants further submit that the Bank's repeated description of the Defendants' case as "afterthought" cannot substitute proof. The Tribunal must decide the controversy on the basis of admissible evidence and the documents forming part of the record.

 

145. The Defendants accordingly submit that the Applicant Bank has failed to establish, to the requisite standard, the entire amount claimed in the OA against the Defendants.

 

XXXII. PRAYER

 

146. In the premises aforesaid, it is most respectfully prayed that this Hon'ble Tribunal may graciously be pleased to;

 

a. Dismiss the Original Application No.15 of 2024 filed by the Applicant Bank against the Defendants;

 

b. Hold that the Applicant Bank has failed to establish the entire claim of Rs.95,63,554.87/- as legally recoverable from the Defendants;

 

c. Hold that the Applicant Bank is not entitled to a recovery certificate for the entire amount claimed in the OA;

 

d. Take into consideration the judgment dated 29.07.2024 passed in S.A. Nos.26 of 2022 and 27 of 2022 and the material findings therein concerning the SARFAESI recovery process;

 

e. Direct the Applicant Bank, in the alternative, to furnish a complete account-wise reconciliation of all four loan accounts, including principal, interest, penal interest, charges, credits, repayments, adjustments and NPA dates;

 

f. Exclude all amounts which are not proved to have been actually disbursed, lawfully debited, contractually recoverable or correctly adjusted;

 

g. Restrict any interest, if found payable, strictly to such amount as is established from the contractual documents and applicable law;

 

h. Grant such other and further relief as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case.

 

AND FOR THIS ACT OF KINDNESS, THE DEFENDANTS AS IN DUTY BOUND SHALL EVER PRAY.

 

 

Filed on behalf of the Defendants

 

 

Advocate for the Defendants