Partly allowed

United Medicals and Others v. State Bank of India

DRAT6 Aug 2025REGULAR APPEAL/32/2025

Case brief

AI extract

What is this about?

The Tribunal allowed the appeal partially, modifying the lower court's order. It held that while the contractual rate applies up to the filing date, pending and future interest must be reasonable at 10% simple per annum under Section 34 CPC, and two deposits of Rs.6.65 lakhs each must be deducted from the outstanding principal.

What did the court decide?

Impugned order modified to fix future interest at 10% simple per annum and deduct Rs.13.30 lakhs from the decretal amount.

United Medicals and Others versus State Bank of India — Banking and Recovery | DRAT (2025)

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Reportable/Non-Reportable

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Appeal No. 32 of 2025-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Appeal No. 32 of 2025

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(Arising out of O.A. 169 of 2010 in DRT, Visakhapatnam)

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HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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M/s United Medicals, A partnership firm, Rep. by its Managing Partner, Smt. Vajja Rani, W/o Late Balakrishna Murthy, Flat No.302, Block “D”, KSR Complex, Seethammadhara, Visakhapatnam, Andhra Pradesh – 500 013;

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Smt. Vajja Rani, W/o Late Bala Krishna Murthy, Flat No.302, Block “D” KSR Complex, Seethammadhara, Visakhapatnam, Andhra Pradesh - 500 013;

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Vajja Sandhya, D/o Late Bala Krishna Murthy, flat No.302, Block “D” KSR Complex, Seethammadhara, Visakhapatnam, Andhra Pradesh-500013;

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Sri Kaja Swaroop, S/o Rama Rao, Flat No.302, Block “D” KSR Complex, Seethammadhara, Visakhapatnam, Andhra Pradesh - 500 013;

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Sri Kaja Rama Rao, S/o Narayanappadu, Flat No.302, Block D, KSR Complex, Seethammadhara, Visakhapatnam, Andhra Pradesh – 500 013.

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… Appellants

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-Versus-

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State Bank of India, Stressed Asset Recovery Branch (SARB) Balaji Nagar, Siripuram, Visakhapatnam, Andhra Pradesh – 530 003.

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… Respondents

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Counsel for Appellants … Mr. Nemani Srinivas Counsel for Respondents … Mr. Soudip Pal Choudhury JUDGMENT : 6^th August, 2025

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THE APPELLATE TRIBUNAL :

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1. Instant appeal has arisen against the order and Judgment dated 25.10.2024 passed by the Learned DRT, Visakhapatnam in O.A. 169 of 2010, State Bank of India -vs- M/s. United Medicals & Others, whereby Learned DRT allowed the O.A. by issuing the Recovery Certificate for an

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Appeal No. 32 of 2025-DRAT-Kolkata amount of Rs.27,13,881.00 with interest @12.75% per annum with compounded monthly rests from the date of filing of the O.A. till the date of full and final realization.

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2. As per the pleadings of the parties, an O.A. under Section 19 of Recovery of Debts And Bankruptcy Act, 1993 (herein referred to as the Act) was filed by the Bank for issuance of a Certificate for Rs.27,13,881.00 with future interest @12.75% per annum with monthly rests against the Defendants. Notices were issued to the Defendants to file the reply.

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3. Learned DRT after taking into consideration the pleadings as well as the evidence filed by the parties arrived at a conclusion that loan facilities were availed by the Appellants herein. Required documents were also executed by the Appellants in favour of the Bank and mortgage was created in respect of schedule property. Hypothecation of stocks was also made but the amount of Rs.27,13,881.00 was not paid and due. It is further held that the contractual rate of interest was @12.75% per annum with monthly rests. Even before the Learned DRT, the Appellants’ plea was confined to claiming of excessive rate of interest and penal charges and wrong calculation of interest. Learned DRT passed the impugned order which is under challenge.

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4. At the very outset, it is to be observed that the Learned Counsel for Appellant categorically stated that the Appellants have not challenged the findings of the Learned DRT. As far as due amount is concerned, an amount of Rs.6,65,000.00 was paid by the Appellants on 13.12.2010 and again an

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Appeal No. 32 of 2025-DRAT-Kolkata amount of Rs.6,65,000.00 was paid by the Appellants on 10.12.2012 which was not adjusted by the Learned DRT. Learned Counsel for Appellants would further submit that the Appellants re also challenging the rate of interest as imposed by the Learned DRT @12.75% per annum with compounded monthly rests.

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5. Learned Counsel for Appellants has placed reliance upon the Judgment of Constitution Bench of the Hon’ble Apex Court in Central Bank of India -vs- Ravindra & Others [(2002) 1 SCC 367] and C.K. Sasankan -vsDhanalakshmi Bank Limited [(2009) 11 SCC 60] and State Bank of India -vs- Patwa Foundation Trust (AIR 2014 MP 17) . Learned Counsel for the Appellants would submit that it is within the discretionary power of the Court to award pendente lite and future interest. Court should not be bound by the contractual rate of interest as far as pendente lite and future interest is concerned.

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6. Per Contra, Learned Counsel for Respondent Bank would submit that Appellants are liable for paying the interest on the contractual rate. Appellants are continuously indulging themselves with the Bank in different litigations which was ultimately decided in favour of the Bank. It is further submitted that Appellants are not entitled for any relief as far as the rate of interest is concerned. Although, the amount deposited on 13.12.2010 and 10.12.2012 can be adjusted.

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7. Learned DRT passed an order for recovery of Rs.27,13,881.00, where in an amount of Rs.6.65 lakhs was

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Appeal No. 32 of 2025-DRAT-Kolkata deposited on 13.12.2010 and an amount of Rs.6.65 lakhs was deposited on 10.12.2012. Accordingly, the same has to be deducted from the due amount along with the reducing interest.

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8. As far as issue of interest is concerned, Constitution Bench of the Hon’ble Apex Court, in the case of Central Bank of India -vs- Ravindra & Others ( supra), held that

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“58. Subject to the above we answer the reference in following terms:

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(1) Subject to a binding stipulation contained in a voluntary contract between the parties and/or an established practice or usage interest on loans and advances may be charged on periodical rests and also capitalised on remaining unpaid. The principal sum actually advanced coupled with the interest on periodical rests so capitalised is capable of being adjudged as principal sum on the date of the suit.

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(2) The principal sum so adjudged is 'such principal sum' within the meaning of Section 34 of the Code of Civil Procedure Code, 1908 on which interest pendent lite and future interest i.e. post-decree interest, at such rate and for such period which the Court may deem fit, may be awarded by the Court.”

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9. In the case of C.K. Sasankan -vs- Dhanalakshmi Bank Limited (supra), it was held that

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“12. According to the provisions of Section 34 of the Code interest is to be awarded at a reasonable rate and on the principal amount. It is needless to point out that although the amount of interest from the date of filing of the suit till the date of the decree and thereafter till realisation is in the discretion of the court as is confirmed by the use of the word `may' but such discretion has to be exercised by the court properly, reasonably and on sound legal principles and not arbitrarily and while doing so the court is also to consider the parameter, scope and ambit of Section 34 of Code.”

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10. It was held that in ascertaining the rate of interest, the Courts of Law can take judicial notice of both inflation and also fall in the bank rate of interest. The Hon’ble Apex Court in C.K. Sasankan (supra) also held that the quantum and rate of interest, which the Appellant in the present case is entitled, would be in accordance with the provisions of Section 34 of the C.P.C.

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Appeal No. 32 of 2025-DRAT-Kolkata

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11. In view of the law laid down by the Hon’ble Apex Court, the quantum and rate of interest would be in accordance with the provisions of the Section 34 of the C.P.C., which provides that the interest has to be awarded at a reasonable rate on the principal amount. It is needless to point out that although the rate of interest from the date of filing of the suit till realisation is at the discretion of the Court as is confirmed by the use of the word ‘may’. Such discretion has to be exercised by the Court properly, reasonably and on sound legal principles and not in arbitrary manner and while doing so, the Court is also to consider the parameter to scope of ambit of Section 34 of the C.P.C.

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12. O.A. was filed on 29.07.2010 for an amount of Rs.27,13,881,00 only. It is undisputed debt. The Appellants have deposited an amount of Rs.6.65 lakhs on 13.12.2010 and Rs.6.65 lakhs on 10.12.2012 meaning thereby the Appellants were prepared to make the deposit but due to certain miscalculations of rate of interest, remaining amount was not deposited but it clearly indicates bona fide of the Appellants in depositing the amount. These are factors which were in favour of the Appellants as far as the question of pendent lite and future interest is concerned. No doubt, Bank is entitled for the contractual rate of interest upto the date of filing of the O.A. Pendente lite and future interest has to be determined by the Courts as per the provisions of the Section 34 of the C.P.C. Accordingly, it will be appropriate that the Appellants should be directed to pay the interest @10% per annum simple. Respondent Bank would

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Appeal No. 32 of 2025-DRAT-Kolkata be entitled for repayment of Rs.2 7,13,881.00 from Appellants. However, Rs.6.65 lacs deposited on 13.12.2010 and Rs.6.65 lacs deposited on 10.12.2012 would be deducted from this amount of Rs.27,13,881.00. Thereafter, Bank would be entitled for pendente lite and future interest @ 10% simple on the decretal amount subject to deduction, as mentioned above.

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O R D E R

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Appeal is partly allowed. Impugned order/Judgment is modified to the extent that the Respondent Bank is entitled for Certificate for Rs.27,13,881.00 wherein an amount of Rs.6,65,000.00 shall be deducted with effect from 13.12.2010 and an amount of Rs.6,65,000.00 shall be deducted from 10.12.2012. The Respondent Bank is also entitled for pendente lite and future interest @10% simple per annum on the residual amount after deduction till the date of realisation.

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No order as to costs.

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File be consigned to Record room.

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Copy of the Judgment/Final Order be uploaded in the Tribunal’s Website.

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Order signed, dated and pronounced in open Court.

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(Anil Kumar Srivastava,J) Chairperson

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Dated: 6^th August, 2025 ac

United Medicals and Others v. State Bank of India

Case brief

What is this about?

What did the court decide?

United Medicals and Others v. State Bank of India

Case brief

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What did the court decide?

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