Housing And Urban Development Corporation Ltd Vs Shashi Bhusan Cold Storage Pvt. Ltd (DRAT Allahabad)
The appeal before the Debts Recovery Appellate Tribunal (DRAT), Allahabad, arose under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The appellant financial institution challenged a part of the judgment dated 02 July 2020 passed by the Debts Recovery Tribunal (DRT), whereby the Original Application (O.A. No. 154/2012) filed for recovery of dues was allowed, but the rate of future interest was reduced.
The respondent borrower company had been granted financial assistance by the appellant financial institution through its managing directors. To secure the loan, the managing directors stood as guarantors and executed personal guarantee letters dated 07 July 2008. Additionally, equitable mortgages were created over certain properties by depositing original title deeds, and relevant loan documents were executed in favour of the financial institution.
Due to failure on the part of the borrowers to adhere to the terms of the loan agreement, the loan account was classified as a Non-Performing Asset (NPA) on 30 November 2010. The financial institution thereafter filed an original application before the DRT seeking recovery of ₹2,55,96,798 as on 23 July 2012, along with future interest at the contractual rate of 15.75% per annum with quarterly rests from 24 July 2012 until realization.
