BEFORE THE DEBTS RECOVERY TRIBUNAL: MUMBI

O.A. No.              of 2020

Between:
Soundtrack Bank Limited
….. Applicant
And
Rockstar Audiophiles Private Limited
      ….. Defendants
1. PARTICULARS OF THE APPLICANT:

A. Name of the Applicant         :  Soundtrack Bank Limited

a Banking Company incorporated under
the provisions of the Companies Act,1956
Represented by its Authorized Signatory 

B. Address of Registered Office      : Mumbai – 400021, India

C. Address for Service of Notice     :  The address for service of all notices
  on the Applicant is that of its Counsels
            Mumbai– 400021

2. PARTICULARS OF THE DEFENDANTS:

A. Name of the Defendants :     1.   Limited

a Company incorporated under the
Companies Act, 1956 and having
its Registered Office at 
Represented by  
Managing
Director ___.

2.  Mr. Sam
Resident of 

       Mumbai– 400034

3. Mr. Dam.
Resident of
  Mumbai– 400034
B. Address for Service of Notice : Same as above

1. JURISDICTION OF THE TRIBUNAL:

The Applicant declares that the branch office of the Applicant is situated
at Mumbai, defendant availed a working capital facility for an amount of
INR 50 lakhs from the Soundtronic Bank via a Loan Agreement executed
on 01.03.2018 from the applicant and the Registered Office of Defendant
No. 1 is situated at. Defendants No. 2 and 3 have both furnished personal
guarantees of INR 25 lakhs each Short-Term Loan and Working Capital
Demand Loan availed by Defendant No. 1 from the Applicant and all of
them are residing at Mumbai. All the above cause of actions took place
within the Jurisdiction of the Hon’ble Tribunal and this Hon’ble Tribunal
has got jurisdiction to adjudicate the present application. Defendant No. 1
availed an amount of Rs. 50 Lakhs under the Working Capital facility
from the Applicant. As on the date of filing the present application the
Defendants are jointly and severally liable to pay Rs. 45 lakhs, towards
repayment of the Working Capital facility. Since the aggregate claim
amount of the Applicant is more than Rs. 10 lakhs, this Hon’ble Tribunal
has got jurisdiction to adjudicate the present application.

2 LIMITATION:

The Applicant declares that the Short-Term Loan facility was availed by
Defendant No. 1 on and Defendant No. 1 paid an amount of Rs. 5 lakhs to
the Applicant on towards part payment of the outstanding amount due
under the Short-Term Loan facility. The Short-Term Loan facility was
recalled by the Applicant by its letter dated addressed to Defendant No. 1.

The Applicant declares that the Working Capital Demand Loan facility was availed by
Defendant No. 1 on. The Working Capital Demand Loan facility was recalled by the
Applicant by its letter dated addressed to Defendant No. 1. Personal Guarantees
furnished on by Defendants No. 2 to 4 with respect to Working Capital Demand Loan
and also the Letter of confirmation extending the Guarantee by Defendant No. 2 and
3 of the said Personal Guarantee to Short Term Demand Loan are subsisting and in
force. [01.06.2022] in favour of the Applicant is also in force.

Therefore the present application is within the limitation period.

 FACTS OF THE CASE:

1. It is submitted that the Applicant is a company incorporated under the provisions

of the Companies Act, 1956 and has been granted a Banking License under the
provisions of Section 5(c) of the Banking Regulation Act, 1949. The Applicant is
represented by its authorised signatory. The Resolution dated passed by the Board
of the Applicant authorizing to represent the Applicant. A copy of the Resolution
dated passed by the Board of the Applicant is filed and annexed herewith as
Annexure P1. A copy of certificate of incorporation of the Applicant, the
Memorandum of Association and the Articles of Association of the Applicant are
filed and annexed herewith as Annexure P3. The Applicant is engaged in the
business of banking which includes inter-alia granting Working Capital Demand
Loan facility ("WCDL"") facilities and Working Capital Demand Loan facilities.

2. It is submitted that Rockstar Audiophiles Private Limited [Rockstar] is a company

incorporated in Mumbai, India. It is involved in the business of wholesale and retail sale
of speakers, headphones, smart audio appliances, and all kinds of audio accessories for
personal and industrial us.

3. It is submitted that the Board of Directors of Defendant No. 1 passed a Resolution

on for availing a Working Capital Demand Loan facility ("WCDL”) of Rs. from the
Applicant. An application was made by Defendant No. 1 based on which the
Applicant sanctioned a ("WCDL") of Rs. 50 lakhs to Defendant No. 1 vide Sanction
Letter dated for the purpose of meeting its working capital requirements.

4. It is submitted that in pursuance of the Supplemental Agreement and to secure the

repayment of the amounts due to the Applicant under the WCDL:

a. Defendant No.2 executed a Personal Guarantee dated in favour of the

Applicant.
b. Defendant No. 3 executed a Personal Guarantee dated in favour of the
Applicant.

5. It is submitted that in 2019, 2020, and 2021, Soundtronic Bank rolled over the amounts
due and payable and renewed the working capital facility. However, due to the financial
crunch, the Bank decided to terminate the arrangement and call upon the borrower
Rockstar to repay the total outstanding amount (including interest and other charges) of
INR 45 lakhs.
6. Soundtronic sent a loan recall notice dated 01.06.2022 to Rockstar and the
guarantors demanding repayment of the total amount outstanding as mentioned
above.

7. As per the acknowledgment slip, the loan recall notice was received by Rockstar on
02.06.2022. However, in the months since, Soundtronics Bank has neither received any
communication from Rockstar nor received any of the amounts recalled via the said
notice

RELIEF’S SOUGHT:

It is therefore submitted that the Hon’ble Tribunal may be pleased to pass

appropriate order(s) for issue of recovery certificate for an amount of Rs. 45 lakhs
against the Defendants and:

a). To pass a decree and issue a Certificate of Recovery for an amount of Rs 45 lakhs
against the Defendants and in favour of the Applicant along with future interest of
[__]% per annum with monthly rests from the date of application till the date of full
and final realization and to allow a certificate for the same. 

b). To direct the Recovery Officer to resort to the modes of recovery under Section 25
(a) and (c) of the Act, if necessary.

c). To pass an order awarding costs to an amount of Rs. 45 lakhs /- incurred by the
Applicant towards the application fee as per Rule 7 of the Debt Recovery Tribunal
(Procedure) Rules 1973.

d). To pass an order awarding cost incurred by the Applicant towards Advocate Fee
and all other incidental expenses.

e). To grant such other relief(s) as this Hon’ble Tribunal deems fit and proper in the
circumstances of the case. 
 VERIFICATION

I, Mr., S/o Mr. [__], Aged [__] years, Occupation: Deputy Vice President-Legal of the
Applicant bank and who is authorized to sign on the application as per the Resolution
passed by the Board of the Applicant, do hereby verify the contents of the Para 1 to
7and state that they are true and correct to the best of my knowledge belief and
information based on records.

Mumbai
Date: 1/7/2022.           SIGNATURE OF THE APPLICANT
 
To 
The Registrar, 
Debt Recovery Tribunal,
Mumbai.
[Insert name, designation, company and address of the addressee] [Mode of
dispatch]

Mr. ____________,     e.g. By Courier/ E-

mail
[Name of Company]
[Address]
     [19-04-2023]

Sir,

Sub Legal Opinion

: on
[Mention the subject or topic]

Ref Your e-mail dated [Specify

date]

Background

Gelo Pvt. Ltd. [Gelo] is a company incorporated in Delhi under the

Companies Act, 2013. It is engaged in the plastic moulding business and
manufactures and wholesale plastic tables, chairs, trolleys, stands, and all
kinds of household plastic-based materials.

Gelo availed a rupee loan facility from the Bank of Kuber on 12.05.2019 for
INR 8 crores. Under the Loan Agreement, Gelo mortgaged its registered office
at 420A, Karkardooma, Delhi. The security was duly registered with Central
Registry of Securitisation Asset Reconstruction and Security Interest of India
(CERSAI).The said CERSAI maintains and operates the Central Registry for
and on behalf of the Central Government.
Gelo defaulted on its payments to the Bank from 12.10.2021 onwards, after
which it was classified as a Non Performing Asset at the beginning of the
year 2022. Its default amount as of 24.04.2022 is INR 1.5 crores. Bank of
Kuber wishes to initiate proceedings under the SARFAESI Act, 2002 for recovery of its loan
proceedings under the SARFAESI Act, 2002 for recovery of its loan

Queries

1. Is Bank of Kuber entitled to avail remedy provided under the SARFAESI

Act? Would your answer change if the lender were an individual instead of a
banking company?

2. Would the Bank be entitled to avail remedy if the account had not been
classified as NPA? Is there any exception to this requirement?

Responses to Queries

Response to Query 1

Bank kuber is a company incorporated under the provisions of the Companies Act,
1956 and has been granted a Banking License under the provisions of Section 5(c) of
the Banking Regulation Act, 1949. It is entitled for recovery under SARFAESI Act as
mentioned in section 2 (1) (zd) of the SARFAESI Act.

But when the lender is a individual According to the SARFAESI Act, 2002,
only banks and financial institutions can take action against defaulting
borrowers by seizing their property1. Individuals who have obtained a
secured asset from the borrower can also be issued notices by the banks to
pay the due amount1. However, individuals cannot file under the SARFAESI
Act against other individuals or entities. They have to approach the civil
courts or other legal forums for recovery of their dues.

Response to Query 2

The bank cannot avail this remedy if the account has not been classified as
NPA, as this is a precondition for invoking the SARFAESI Act. However,
there may be some exceptions to this requirement in certain cases. For
example, if the borrower has transferred or sold the secured asset without
the consent of the bank, or if the borrower has committed fraud or
malfeasance, the bank may be able to take action under the SARFAESI Act
even id the account is not NPA. These exceptions are based on the principle
of equity and justice and are subject to judicial scrutiny 1

Assumptions/ Disclaimers
If there are any assumptions or disclaimers based on which you have issued
the opinion, e.g. the assumption that the management has provided correct
copies of resolutions, or that certain Management Representatives (MR) have
provided information on telephonic conversations and you have assumed it
to be true, state the same. 

We hope that the above shall suffice for your present purposes. We shall be
happy to provide a detailed analysis of the issues considered herein, should
you so require. Please do not hesitate to contact us for any clarifications. 

Yours truly,

[Signature of Advocate]

[Name of advocate]
[Designation, Firm name and other details about advocate, if necessary]
 DEMAND NOTICE

To,
Gelo Pvt. Ltd.
420A, Karkardooma,
Delhi – 110092

Dear Sir(s)/Madam(s),

Subject: Demand notice under Section 13(2) of the Securitization and

Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (SARFAESI Act)
I, the undersigned, being the Authorised Officer of [name of lender] Bank
(“the Bank”) appointed pursuant to the provisions of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (“the Act”), read with the Security Interest (Enforcement) Rules, 2002
(“the Rules”), do hereby issue this Statutory Demand Notice to you, under
Section 13(2) of the Act as under:

The Borrower, a partnership firm having its registered office at the address
aforementioned, approached the Bank in and around the financial year
seeking sanction of various facilities in the nature of working capital
facilities for meeting its working capital requirements.

We, Bank of Kuber, hereby give you notice under Section 13(2) of the
SARFAESI Act that you have failed to pay the amount due to us in respect of
the loan facility availed by you from us on 12.05.2019 for INR 8 crores.

The details of the amount payable by you as on 24.04.2022 are as follows:

Principal amount: INR 6.5 crores

Interest: INR 1 crore
Penal interest: INR 50 lakhs
Total amount due: INR 8 crores
You have mortgaged your registered office at 420A, Karkardooma, Delhi in
our favour as security for the loan facility. The security was duly registered
with CERSAI.

We hereby require you to pay the above-mentioned amount along with

further interest and other charges within 60 days from the date of receipt of
this notice, failing which we shall be entitled to take possession of the
secured assets and sell or transfer them in accordance with the provisions of
the SARFAESI Act and the rules made thereunder.

We also draw your attention to the provisions of sub-section (8) of section 13

of the SARFAESI Act, which states that if you pay the amount due before the
date fixed for sale or transfer of the secured assets, then no further step
shall be taken by us for transfer or sale of that asset.

Please note that this notice is without prejudice to our rights and remedies
under any other law for the time being in force.

Yours faithfully,

Bank of Kuber