Remanded

M/s Sri Srinivasa Rice and Flour Mill and Ors. v. State Bank of India

DRAT10 Jul 2026REGULAR APPEAL/74/2024

Case brief

AI extract

What is this about?

The Tribunal examined appeals against an impugned DRT order in a debt recovery matter involving State Bank of India and borrowers. It held the DRT failed to address specific directions from the appellate court regarding interest accounts. The matter was remanded to the DRT for fresh decision within six weeks.

What did the court decide?

Directs the DRT-Visakhapatnam to decide the Original Application afresh within six weeks, complying with the specific directions of the DRAT regarding interest accounts.

M/s Sri Srinivasa Rice and Flour Mill and Ors. versus State… — Banking and Recovery | DRAT (2026)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Appl. No. 34 of 2019

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(Arising out of O.A. No 139 of 2006 – DRT-Visakhapatnam)

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THE HON’BLE JUSTICE SHRI ANIL KUMAR SRIVASTAVA, CHAIRPERSON

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10.07.2026

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STATE BANK OF INDIA having office at Atchampet, SRSM Complex, Amravati Road, Atchampet, Dist. Guntur – 522409, A.P.

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... Appellant

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--Vs--

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M/s Sri Srinivasa Rice and Flour Mills and Ors having office at Atchampeta , Guntur Dist – 522409, A.P.

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Sri Sure Yoganandan, residing at Atchampeta, Guntur District, Pin Code-522409, Andhra Pradesh.

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3.Sri Rambabu, residing at Son of Sri Sure Yoganandan residing at Atchampeta, Guntur District, Pin Code-522409, Andhra Pradesh.

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... Respondents

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For Appellant : Mr. Prasanta Kr. Sinha, Ld. Adv. Mr. Pankaj Kr. Mukherjee, ld. Adv.

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For respondent : Mr. T. Jeevan, ld. Adv.

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Appal No. 74 of 2024 (Arising out of O.A. 139 of 2006 – DRT – Visakhapatnam)

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M/s Sri Srinivasa Rice and Flour Mill having office at D No. 2-95, Atchampeta, Guntur Dist.

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Sri Sure Yoganandam residing at D.No. 2-95, Atchampeta, Dist. Guntur.

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... Appellant

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--Vs--

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STATE BANK OF INDIA having office at State Bank of India, Atchampeta , Guntur Dist., Andhra Pradesh.

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... Respondents

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For Appellant : Mr. T. Jeevan, ld. Adv. For Respondent : Mr. Prasanta Kr. Sinha , ld. adv. Mr. Pankaj Kr. Mukherjee, ld. Adv.

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THE APPELLATE TRIBUNAL :

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Both the appeals are filed against a common judgment and order dated 06.03.2019 passed by learned DRT – Visakhapatnam

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in O.A. 139 of 2006 (State Bank of India Vs. M/s. Sri Srinivasa Rice & Flour Mill & Ors.).

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Appeal No. 34 of 2019 is preferred by the appellant State Bank of India while Appeal No. 74 of 2024 is preferred by the appellant M/s. Sri Srinivasa Rice & Flour Mill and their Managing Partner, Sri Sure Yoganandam, who are defendant no. 1 and 2 in the O.A. No appeal is preferred by defendant no.3, Sri Sure Rambabu, Partner of defendant no.1 partnership firm.

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As per pleadings of the parties, Original Application u/s 19 of the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter referred to as ‘Act’) was filed by the bank against the defendant no. 1, 2 and 3, namely M/s. Sri Srinivasa rice & Flour Mill, partnership firm represented by its Managing Partner, Sri Sure Yoganandam, and Partner, Sri Sure Rambabu, for issuance of certificate to the tune of Rs.68,92,272/- being debt due on cash credit account with interest at the rate of 8.75% per annum with quarterly rests pendente lite and future, in default, direction to sale of the mortgage property mentioned in schedule ‘B’ and ‘C’ and also direction to sale of the hypothecated goods, furniture and other equipments.

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Defendant no.1 namely, M/s. Sri Srinivasa Rice & Flour Mill, a partnership firm, is registered under the Partnership Act. Defendant no.2, Sri Suru Yoganandam, is Managing Partner while defendant no.3, Sri Sure Rambabu, is Partner. Defendants availed financial facility from the bank since 1990 for its business

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purpose. By a letter dated 05.04.2005 cash credit limit was enhanced to the tune of Rs.30.00 lakhs by the bank besides existing facility of defendant no.1 and the interest thereon. Defendants accepted the terms and conditions of the sanction and acknowledged the same by signing documents. Facilities granted by the bank were also availed by them. Enhance facility was to be released in two installments. Release of second instalment was subject to the satisfactory performance of the terms and conditions of sanction. First instalment of Rs.15.00 lakhs was released. Enhance limit was secured primarily by hypothecation of stocks and collaterally by machinery and equitable mortgage of property of defendant no.2 and 3, besides their personal guarantee. While enhanced sanction of Rs.30.00 lakhs was being granted besides existing facility of the term loan of Rs.56,39,343/- in the form of working capital (Rs.25,74,407/), Funded interest Term Loan (FITL Rs.27,87,644/-) and Term Loan (Rs.2,77,292/-) and interest thereon re-habilitation package with additional capital requirement of the defendant no.1. All the documents for availing the financial facilities were executed by the defendants. Loan was collaterally secured by equitable mortgage of immovable property which was described in Schedule ‘B’ and ‘C’ of the O.A. and the documents of partition deed dated 06.03.1991 (Regd. Document No.295 of 1991); Registered sale deed dated 30.12.1996 (registered as document no. 2335 of 1996); Registered sale deed dated 05.02.1994

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(registered as document No. 70 of 1994); and Registered sale deed dated 09.02.1998 (registered as document no. 164 of 1998) were deposited by defendant no.2 with the letter of confirmation dated 19.04.2005. Apart from it registered sale deed dated 07.09.1996 (registered as document No. 1764 of 1995) and Registered sale deed dated 07.09.1996 (registered as document No. 1766 of 1995) were deposited by defendant no. 2 and 3 and were also confirmed by letter dated 19.04.2005. Defendants faulted the terms of sanction of the loan facility and terms of guarantee. They did not repay the loan outstanding. Accordingly, Original Application u/s 19 of the Act was filed for issuing certificate in favour of the bank against defendant no.1, 2 and 3, holding them jointly and severally liable to pay Rs.68,92,272/- under cash credit account with interest @ 8.75% per annum with quarterly rests pendente lite and future. In default sale of the mortgage property mentioned in schedule ‘B’ and ‘C’ and also hypothecated property. 5. Written statement was filed by defendant no.1 stating that the defendant no.1 has availed financial facility since 1980. Signature of defendants was obtained by the bank on blank documents. At the time of releasing the amount of Rs.30.00 lakhs signatures were obtained by the bank. Undisputedly, defendant no.1 is a partnership firm, defendant no.2 its Managing Partner and Defendant no.3 is Partner. Defendant no.1 was doing good business, however, suffered loss. Proposal was sent

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to the bank by defendant no.1 vide letter dated 26.02.2005 for financial assistance of Rs.30.00 lakhs. Amount of Rs.30.00 lakhs was sanctioned by the bank under rehabilitation package vide letter dated 05.04.2005. At the time of release of Rs.15.00 lakhs, bank obtained signatures of the defendants on several blank documents including the promissory note, which was subsequently filled with the figure of Rs.30.00 lakhs, when defendant no.1 requested the bank to release the amount of Rs.15.00 lakhs. Interest on this amount was also paid every month. Instead of releasing the balance amount of Rs.15.00 lakhs, bank recalled the loan amount vide letter dated 10.03.2006. Release of second instalment of Rs.15.00 lakhs was also denied on the ground of unsatisfactory performance, although no enquiry was made by the bank in this regard after release of the first instalment. Reply to the legal letter was sent by the defendant on 15.03.2006 and 27.03.2006. However, without considering the explanation, bank vide letter 01.08.2006 asked the defendant to repay the entire outstanding amount. 6. Despite repeated request of the defendants the amount was not released and Notice u/s 13(2) of the SARFAESI Act, 2002 was issued on 01.09.2006 wherein objections were filed by the defendants on 25.10.2006. Defendants’ lawyer notice dated 13.11.2006 was duly replied. Authorized Officer of the bank informed the defendants that bank will take over possession through the possession notice issued on 27.11.2006 which was

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also published in the Newspaper ‘Eenadu’ as well as in English newspaper on 27.11.2006. Defendant no.1 is not concerned with the SRSM complex property as defendant no.2 and 3 have taken loan against that property and the same was also cleared by them. In schedule ‘C’ property, most of the properties were released by the bank. Item No. 1(A) of the ‘B’ schedule was released by the bank on 25.02.2003 although it is shown as mortgaged property. All the properties in ‘C’ schedule have already been released by the Bank. The rehabilitation package in the scheme was not followed by the bank and it was reschedule vide letter dated 05.04.2005 wherein it stated that interest (FITL) of Rs.27,87,644/- on the amount of Rs.28,51,699/- i.e. total of Rs.25,74,407/- of WCTL plus Rs.2,77,292/- off TL. Interest was not calculated as per RBI guidelines. Interest claimed is excessive and defendants are not liable to pay any amount. Bank is not entitled to any amount.

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O.A. was decided by the learned DRT – Visakhapatnam on 16.06.2016 allowing the O.A. to the extent of Rs.53.92 lakhs, it was also held that as the said amount has been recovered from the defendants by sale of the mortgaged properties, the said modified claim stands fully satisfied and the bank is not entitled to recover any further amount from the defendants no.1, 2 and 3. 8. Feeling aggrieved by the said judgment and order Appeal No. 217 of 2017 was filed by the bank while Appeal No. 64 of 2017 was filed by the defendants before DRAT, Kolkata. Both the

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appeal was decided on 19.04.2018 wherein it was observed that learned DRT has not taken into consideration the four accounts relating to the interest which was filed along with affidavit dated 08.09.2010. It was also observed that learned DRT decreed the claim for Rs.53.92 lakhs, which is the amount of sale proceeds, which also requires for consideration. Matter was remanded to the learned DRT. After remand, learned DRT passed the impugned judgment and order. The same was originally passed by learned DRT for an amount of Rs.53.92 lakhs.

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Feeling aggrieved by the impugned judgement and order bank as well as defendants preferred separate appeals. 10. In the appeal filed by the bank relief was sought for allowing the O.A. in toto as prayed for while in the appeal filed by the defendants relief was sought for fixing lesser amount than Rs.53.92 lakhs. 11. I have heard the learned counsel for the bank as well as learned counsel for the defendants and perused the records. 12. Learned counsel for the appellant would submit that learned DRT erred in passing the impugned order by reducing the amount to Rs.53.92 lakhs. It is submitted that in the written statement in Para 8 defendants have admitted their signatures, although with an explanation that signatures were obtained on blank papers, but they failed to prove it. It is further submitted that when the signatures are admitted and no rebuttal or prove against it, the contents of the document should be accepted in evidence.

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Learned counsel would further submit that initially cash credit limit of Rs.30.00 lakhs was sanctioned and on further request of the defendants which was restructured vide letter dated 26.02.2005 written by the defendant. There was an admission of accrual of interest till 26.02.2005 on the amount to the extent of Rs.27.88 lakhs. This admission shall be read against the defendants. It is further submitted that reply to the same was sent by the bank on 05.04.2005 giving details of all the accounts. Hon’ble High Court in Writ Petition No. 26276 of 2006 held that the bank is entitled to sale all the auctioned properties. All the four properties have already been sold except one which is at item no.4 of schedule ‘B’. The liability is admitted by the defendants to the extent of Rs.68,92,272/- which is duly approved by the statement of witnesses namely Sri Banka Vara Prasad; Sri Nadendla Vasudeva Rao; and C. S. Prasada Rao. Documents relating to deposit of title deed was also accepted by the defendants wherein document no. 164 of 1996 was also deposited and claim was admitted to the extent of Rs.86.39 lakhs. But learned DRT without assigning any reason has not allowed the claim of interest to the extent of Rs.27,87,644/-. 13. Learned counsel for respondent borrower would submit that learned DRT erred in allowing the O.A. The property SRSM Complex at annexure ‘C’ has already been sold. Some of the properties of the defendants are already sold. No amount is due to the appellant bank. In the statement of accounts, brought-

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forward entries are made. Rehabilitation package came into force on 05.04.2005, but second instalment of Rs.15.00 lakh pending realization from the bank. No claim prior to 05.04.2005 can be allowed against the defendants. Proceedings in S.A. under SARFAESI Act, 2002 and O.A. under Recovery of Debts and Bankruptcy Act, 1993 are independent proceeding. Remand order passed by the DRAT, Kolkata on 19.04.2018 categorically stated that four accounts relating to interest to be looked into by the DRT after remand. Calculations in the letter dated 05.04.2015 are wrong. The findings of the earlier judgment could not be disturbed. Document exhibited at A-13 is a Xerox copy. The judgment passed in S.A. proceeding cannot affect findings of the O.A. proceeding. In Exhibit A-13 there is no creation of mortgage of SRSM Complex and title deeds were deposited on three occasions i.e. 06.12.1991, 19.05.1997 and 14.09.1998. The amount shown and claim by the bank is not due.

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Earlier O.A. was decided by the learned DRT by passing judgment and order dated 16.06.2016 which was allowed for an amount of Rs.53.92 lakhs and it was further held that since the amount is recovered by the bank by sale of mortgage properties, claim stands fully satisfied. Appeal No. 217 of 2017 filed by the State Bank of India and Appeal No. 64 of 2017 filed by the defendants were decided by a common judgment on 19.04.2018 whereby DRAT, Kolkata held that DRT has not taken into consideration four accounts relating to interest which have been

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filed along with affidavit dated 08.09.2010. Accordingly, matter was remanded for re-consideration. Appeal filed by the bank was allowed and the judgment and order was set aside and matter was remanded back to the learned DRT. Thereafter, learned DRT decided the O.A. by the impugned judgment and order dated 06.03.2019.

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Perusal of the impugned judgment dated 06.03.2019 would reveal that learned DRT has not made any effort to comply the order passed by the DRAT, Kolkata. Categorical direction was issued by the Appellate Tribunal regarding consideration of four accounts relating to interest by the learned DRT. Perusal of the impugned judgment would show that this judgment is nothing but a simple reiteration of the pleadings coupled with notes of argument of the parties and thereafter learned DRT without applying its mind mentioned that it goes with the finding earlier recorded by the DRT and passed the judgment without recording any finding. No finding is recorded regarding the amount of interest in the four accounts as per direction of DRAT, Kolkata. It was expected from the learned DRT to comply the direction of the DRAT, Kolkata after applying its mind and recording finding after due scrutiny of the material available on record. Learned DRT simply re-written the judgment by copying the pleadings and written notes of argument as well as citations without applying its mind and without recording any finding. Such an approach of learned DRT is not in accordance with law.

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Accordingly, we are left with no option but to again remand back the matter to decide afresh in the light of the direction made by the DRAT, Kolkata by the judgment dated 19.04.2018 and the observation made in the body of the instant judgment.

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O R D E R

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Both the appeals No. 34 of 2019 and 74 of 2024 are disposed of with the direction that learned DRT to decide the O.A. afresh as per direction of the DRAT, Kolkata in Appeal No. 217 of 2017 and 64 of 2017 dated 19.04.2018 and the observation made in the body of the judgement. It is needless to observe that since this is an old matter, learned DRT should make effort to decide the matter afresh preferably within a period of six weeks from the date when copy of the judgement placed before them. Parties are directed to appear before learned DRT – Visakhapatnam on 28.07.2026.

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File be consigned to record room.

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Copy of the Order be uploaded in the Tribunal’s website. Order dictated, signed and pronounced by me in the open Court on this the 10^th day of July, 2026.

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(Anil Kumar Srivastava, J) Chairperson

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Dated : 10.07.2026 /pkb

M/s Sri Srinivasa Rice and Flour Mill and Ors. v. State Bank of India

Case brief

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M/s Sri Srinivasa Rice and Flour Mill and Ors. v. State Bank of India

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