Allowed

Dr.Jacob Mani v. State Bank of India & Anr.

DRAT23 Apr 2025REGULAR APPEAL/17/2020

Case brief

AI extract

What is this about?

The DRTA dismissed an appeal challenging a Debt Recovery Tribunal's order for loan recovery. The court found the appellant borrowed the loan, which was credited to his account, despite allegations of fraud and prior acquittal of a guarantor. While rejecting the appeal, the court modified the interest rate to 6%. There was no relief granted to the appellant other than rate reduction.

What did the court decide?

The interest rate was reduced to 6% p.a. on the claimed amount; the appeal was otherwise dismissed.

Dr.Jacob Mani versus State Bank of India & Anr. — Contract and Commercial Disputes | DRAT (2025)

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 23^rd day of April, 2025

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PRESENT: HON’BLE MR. JUSTICE G. CHANDRASEKHARAN

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CHAIRPERSON

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RA 17/2020

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(arising out of TA 492/2016 on the file of DRT - II, Ernakulam)

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Between

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Dr. Jacob Mani, S/o. Challiyil Mani, T.C. No.13/1757, Makayiram, Elanjimoodu Lane, Medical College Post, Thiruvanathapuram now residing at: Challiyil House, Wilson Street, Chandrakadavu, Kottayam - 686 001. ...Appellant

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And

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1. State Bank of India, Pattom Branch at Thiruvanathapuram District, Kerala State, Represented by its Branch Manager.

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2. Sri Philip Thomas, Varambathu House, Nalanchira, Thiruvanathapuram …..Respondents

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Counsel for Appellant : Mr. K.Moorthy Counsel for R1 : Mr. K.Mohandas Counsel for R2 : None

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ORDER

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This appeal is filed under Section 20 of RDDB & FI Act challenging the final order passed by the Ld. Presiding Officer, DRT - II, Ernakulam in TA 492/2016 dated 30.08.2019.

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The 1^st respondent bank filed the aforesaid TA 492/2016 against the appellant and 2^nd respondent for recovering a sum of Rs.10,77,869.94p along with pendent lite and future interest and for costs. The case of 1^st respondent is that appellant availed a mortgage loan of Rs.8 Lakhs on 10.04.2001. Appellant deposited title deeds on 10.04.2001 with an intention to create equitable mortgage. Appellant also executed loan documents. 2^nd respondent executed a Deed of Guarantee dated 10.04.2001 guaranteeing the payment of loan by the appellant. Appellant has not repaid the loan and therefore, the account was classified as non-performing asset. Legal notice dated 26.10.2002 was issued claiming the due amount. On the appellant and 2^nd respondent’s failure to repay the amount, the OA was filed for recovering the due amount.

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It is the case of appellant, before the DRT that appellant neither availed any loan facility nor created any equitable mortgage in favour of the 1^st respondent bank. A huge fraud was committed by the bank officials and 2^nd respondent. 2^nd respondent used to avail loans in the names of persons known to him, luring them into offer their property as security for the loan. Loans were availed for ineligible persons. Therefore, CBI has charge sheeted the Bank officials, Mr.I.N.Suresh Kumar (former Chief Manager SBI), Mr.M.T.Sivakumar (former Manager [PB], SBI) and also the 2^nd respondent vide FIR No.R.C 12 (A)/2003 for the offences under Sec. 120 B IPC read with Sec.420 IPC and Sec.13 (2) of the P.C.Act read with Sec. 13(1) (d) of the P.C.Act. 2^nd respondent was a student of the appellant. 2^nd respondent owns a shop called “Appliances World”. Appellant purchased washing machine and refrigerator from this shop. When appellant intended to sell his property, 2^nd respondent expressed his desire to purchase the same. 2^nd respondent requested the appellant to deposit

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money with the 1^st respondent bank to help him get the loan for purchasing the property from the appellant. 2^nd respondent also requested the appellant to offer his property as a collateral security for getting the loan of Rs.8 Lakhs, promising to repay the amount. With a view to help him, appellant agreed to come to the bank, where appellant was made to sign certain blank papers, blank printed papers and vouchers. Appellant never intended to create a mortgage over his property. The loan amount was not disbursed to him.

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During the course of enquiry before the DRT, Ex.A1 to A9 and Ex.D1 to D3 were marked. Considering the evidence produced before the DRT, the Ld. Presiding Officer, allowed the TA 492/2016 and thus this appeal is filed.

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It is the submission of Ld. Counsel for the appellant that appellant signed the blank documents only as a guarantor to the loan availed by the 2^nd respondent, but the documents were manipulated to show that appellant was the borrower. The loan agreement shows that EMI payment has to be made, but not even a single instalment was deducted from the salary of the appellant. In CC 20/2011, the Special CBI Court, Trivandrum had acquitted the 2^nd respondent. Appellant filed Crl.Appeal No.53/2024, but that was dismissed on the ground that appellant was not a victim to maintain the appeal. Appellant requested the CBI to file an appeal. There is no proof filed by the bank to show the disbursement of Rs.8 Lakhs of the loan amount to the appellant. When there is no evidence produced to show the disbursement of the loan amount, appellant cannot be fastened with the loan liability. Thus, appellant prays for setting aside the order of DRT in TA 492/2016 and allowing this appeal.

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In reply to this submission, Ld. counsel for R1 bank submitted that as rightly pointed out by Ld. Counsel for appellant, CBI Court has acquitted the 2^nd respondent. The appeal filed by the appellant was also dismissed. The records produced shows that the loan amount was transferred to the account of the appellant and was utilized by him. The loan documents also show that appellant was the borrower and he availed

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the loan from the 1^st respondent bank. Thus, Ld. Counsel for R1 bank prayed for confirming the order of the Ld.Presiding Officer and dismiss this appeal.

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Considered the rival submissions and perused the records.

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It is seen from the records produced and submissions made, appellant was sanctioned the loan of Rs.8 Lakhs on the basis of his application dated 10.04.2001, with interest at the rate of 15.5% per annum with quarterly rests. The EMI for this payment is Rs.19,120/- per month. Appellant offered his property as security for the loan. This loan was guaranteed by the 2^nd respondent by executing a Deed of Guarantee. Appellant had also executed Agreement of Loan agreeing to pay monthly instalment of Rs.19,120/- per month till the loan is repaid. The account statement of the appellant bearing Account No.0159300673600 shows that Term Loan of Rs.8 Lakhs was transferred to this account on 10.04.2001. The aforesaid documents show that appellant had borrowed the amount of Rs.8 Lakhs and that was transferred to his account.

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It is also seen from the copy of the charge sheet filed that 2^nd respondent and two bank officials mentioned earlier were prosecuted by the CBI for the offences under Sec. 120 B IPC read with Sec.420 IPC and Sec.13 (2) of the P.C.Act read with Sec. 13(1) (d) of the P.C.Act. The charge against them and the 2^nd respondent is that, the accused entered into a criminal conspiracy with each other, especially A1 & A2 sanctioned loan to ineligible persons to cover the liability of the 2^nd respondent. On the basis of 309 cheques issued by 2^nd respondent to M/s.Carnot, discounted by A1 & A2 and credited into the account of M/s.Appliances world, a total sum of Rs.7,44,70,419/- was swindled, causing loss to the bank. The reading of the charge sheet shows that there was a huge fraud committed by the 2^nd respondent in connivance with the bank officials. However, the fact remains as admitted by the Ld. Counsel for appellant that the criminal case against the 2^nd respondent ended in acquittal. The appeal filed against thereof, by the appellant was dismissed. Therefore, charge sheet is of not much use to the case of the appellant.

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The records produced in this case shows that appellant was the borrower, loan amount was credited to his account. Therefore, there is no way that this Tribunal can interfere with the findings of DRT. However, taking into consideration the peculiar circumstances of the case, this Tribunal reduces the contractual rate of interest to 6% per annum, from the date of application till the date of realization, on the amount claimed in the OA.

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With this modification, this Appeal RA 17/2020 is dismissed.

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Parties shall bear their own costs. Pending IAs, if any, stand closed.

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[Dictated to Steno (DD), transcribed by her, corrected, signed and pronounced by me in open court, this 23^rd April, 2025]

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Sd/- (JUSTICE G. CHANDRASEKHARAN) CHAIRPERSON

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Dr.Jacob Mani v. State Bank of India & Anr.

Case brief

What is this about?

What did the court decide?

Dr.Jacob Mani v. State Bank of India & Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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