Allowed

State Bank of India v. Sh. Bharat Singh

DRT27 Oct 2023OA/491/2022

Case brief

AI extract

What is this about?

Recovery Tribunal allowed an original application filed by State Bank of India against legal heirs of a deceased borrower. The Tribunal ordered recovery of the principal amount along with future interest at 5% per annum, clarifying that heirs' liability is limited to the inherited estate.

What did the court decide?

Recovery certificate issued for principal sum of Rs. 53,86,468 with future simple interest @5% per annum w.e.f. filing date. Defendants' liability is joint, several, and confined to the estate of the

State Bank of India versus Sh. Bharat Singh — Banking and Recovery | DRT (2023)

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DEBTS RECOVERY TRIBUNAL-2, CHANDIGARH, PRESIDED OVER BY M.M. DHONCHAK

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ORIGINAL APPLICATION NO. 491/2022

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DATE OF INSTITUTION: 11.03.2022

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DATE OF DECISION: 27^th DAY OF OCTOBER, 2023

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State Bank of India, a body corporate, constituted under the State Bank of India Act, 1955, having its Central Office at Madam Cama Road, Nariman Point, Mumbai and one of its Local Head Offices at Sector 17-A, Chandigarh and one of its Branches, i.e. State Bank of India, VPO Kharakpunia, Tehsil Barwala, District Hisar through its Branch Manager, Sh. Ajay Pratap Singh Sengar

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…..Applicant Bank

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Versus

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Sh. Bharat Singh deceased through his LRs

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i. Sh. Jaibir s/o Late Sh. Bharat Singh

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ii. Sh. Birender Kumar s/o Late Sh. Bharat Singh

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iii. Sh. Dilbag Singh s/o late Sh. Bharat Singh

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All are residents of Village Kharakpunia, Tehsil Barwala, District Hisar, Haryana

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....Defendants

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Argued by: Ms Kirti Sandhu, Manager Law for the applicant bank Defendant Nos. 1(i) and 1(iii) ex parte vide order dated 14.10.2022 Defendant No. 1(ii) ex parte vide order dated 17.05.2023

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FINAL ORDER

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Present Original Application was instituted by the applicant bank under Section 19(1) of the Recovery of Debts Due to Banks

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OA/491/2022 STATE BANK OF INDIA VS BHARAT SINGH 2

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and Financial Institutions Act, 1993 (hereinafter referred to as ‘the Act’ for brevity), against the defendants for recovery of Rs.53,86,468/- (Rupees Fifty Three lac Eighty Six Thousand Four Hundred and Sixty Eight Only) . It has been filed through Sh. Ajay Pratap Singh Sengar, Branch Manager of the applicant bank stated to be competent to institute the Original Application.

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The brief facts of the case of the applicant as per Original Application are that defendant No. 1 had approached the applicant bank for grant of KCC facility of Rs. 2 lac further approached for enhancement to Rs. 2,90,000/again approached for enhancement to Rs. 12.90 lac and again approached for enhancement to Rs. 35 lac vide loan applications dated 23.05.2005, 09.05.2008, 01.05.2012, 16.12.2014 and 18.03.2015, Annexures-A1, A4, A10, A11 and A14 (copy).

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The applicant bank sanctioned the above said facility to defendant No.1 vide letters of arrangement dated 23.05.2005, 03.06.2008, 16.12.2014 and 18.03.2015, Annexures-A2, A5, A12 and A15 (copy) as per terms and conditions which were duly accepted by the defendants. 4. In order to secure the aforementioned credit facility, defendant No.1 executed various loan and security documents, i.e. hypothecation agreement dated 23.05.2005, 03.06.2008, 16.12.2014 and 18.03.2015, Annexures-A3, A6, A13 and A16 (copy). Defendant No. 1(ii) executed letter dated 22.02.2018 regarding informing death of defendant No. 1 and confirmation to deposit overdue amount, Annexure-A19 (copy). Defendant Nos.

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OA/491/2022 STATE BANK OF INDIA VS BHARAT SINGH 3

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1(i), 1(ii) and 1(iii) executed undertaking dated 20.03.2020 by legal heir in case of deceased account, Annexure-A20 (copy).

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The aforesaid loan was further secured by creation of mortgage by defendant No. 1 in respect of agricultural land measuring 134 Kanal 10 Marla situated in the revenue estate of Kharakpunia, Tehsil Barwala, District Hisar, Haryana, fully detailed in para No. 5(e) of the Original Application.

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The documents relating to the mortgage are as under:

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i. Registered mortgage deeds dated 02.06.2008 and 17.03.2015, Annexures-A7 and A17 (copy).

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ii. Request letters dated 02.06.2008 and 17.03.2015 to the Tehsildar, Barwala, for entry/mutation of mortgaged property, Annexures-A8 and A18 (copy).

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It is further the case of the applicant bank that the loan facility was duly availed of by the defendants but they failed to maintain the financial discipline of the applicant bank leading to the loan account becoming irregular and it being classified as NPA on 31.05.2021. The defendants executed balance confirmatory-cumacknowledgement of security letter dated 27.05.2011, AnnexureA9 (copy). The applicant bank recalled entire outstanding amount vide legal notice dated 21.12.2020 along with its postal receipts, Annexure-A22 (colly) (copy), but to no avail.

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It is further the case of the applicant bank that after adjusting debit and credit entries in the loan account, a sum of Rs.53,86,468/- (Rupees Fifty Three lac Eighty Six Thousand

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Four Hundred and Sixty Eight Only) is recoverable against the

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OA/491/2022 STATE BANK OF INDIA VS BHARAT SINGH 4

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defendants as per statement of account dated 08.03.2022, duly certified under Bankers’ Books Evidence Act, 1891, Annexure-A21 (colly) (copy).

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Since the defendants did not repay the outstanding amount, therefore, the applicant bank preferred the present Original Application for issuance of Recovery Certificate.

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Notices of the Original Application were duly served upon

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the defendants, but since none appeared on behalf of the defendants, thus, defendant Nos. 1(i) and 1(iii) were proceeded against ex parte vide order dated 14.10.2022 and defendant No. 1(ii) was proceeded against ex parte vide order dated 17.05.2023.

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In support of contents of the OA, affidavit of evidence of Sh. Ajay Pratap Singh Sengar, Branch Manager of the applicant bank was filed.

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This Tribunal has heard ex-parte arguments advanced by Ms Kirti Sandhu, Manager Law of the applicant bank and gone through the record carefully.

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It was argued by Ms Kirti Sandhu, Manager Law for the applicant bank that in view of unrebutted documentary evidence brought on record, the applicant bank had proved its case against the defendants for recovery of the amount sought. From perusal of Annexures-A1 to A22 , it is clear that the defendants had approached the applicant bank for availing of the loan facilities which were granted to them. It is further clear that the defendants had executed all the relevant documents as stated above in favour of the

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OA/491/2022 STATE BANK OF INDIA VS BHARAT SINGH 5

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applicant bank. Unfortunately, the defendants failed to pay back the loan as per terms and conditions of the agreement executed between the parties. Sh. Bharat Singh had died, leaving behind defendant Nos. 1(i), 1(iii) and 1(iii) as his legal heirs who have been impleaded as defendants. From the documentary evidence brought on record, it is proved that applicant bank is entitled to recover a sum of Rs.53,86,468/- (Rupees Fifty Three lac Eighty Six Thousand Four Hundred and Sixty Eight Only) from the defendants.

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In so far as pendent lite and future interest is concerned, the applicant bank has claimed rate of interest @10.60% per annum. In letter dated 18.03.2015 of arrangement, Annexure-A15 (copy), the rate of interest has been mentioned @11.75% per annum.

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This Tribunal is of the considered opinion that sometimes in appropriate cases the prerogatives of mercy and magnanimity are the brightest jewels in the crown of the Judge. Keeping in view the facts and circumstances of the instant case including the Pandemic Covid-19 affecting businesses, nature of mortgaged property, purpose of loan, i.e. agricultural, present condition of economy based on agriculture, quantum of loan, prevalent market rates of interest which have gone drastically downhill in yesteryears and death of the borrower, while exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant uniform simple interest @5% per annum from the date of filing of the OA till realisation of the amount ordered vide this order. It is ordered accordingly.

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OA/491/2022 STATE BANK OF INDIA VS BHARAT SINGH 6

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In the result, the Original Application is allowed with costs holding that the defendants are liable to pay to the applicant bank a sum of Rs.53,86,468/- (Rupees Fifty Three lac Eighty Six

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Thousand Four Hundred and Sixty Eight Only) with current and future simple interest @5% per annum w.e.f. 11.03.2022 , till the date of realisation of the amount. The liability of the defendants shall be joint as well as several. Accordingly, the applicant bank shall be at liberty to recover aforesaid amount from the sale of mortgaged/hypothecated property of the defendants in execution proceedings, if not sold earlier under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 or otherwise. If the dues of the bank still remain unsatisfied, the applicant bank shall be at liberty to recover the same by attachment and sale of personal assets of the defendants. The applicant bank is at liberty to enforce the claim through due process of law. However, it is clarified that

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there should not be any ambiguity that the liability of the defendants by virtue of their being the legal heirs of the deceased borrower shall remain confined only to estate of the deceased borrower if it is inherited by them and not beyond that or otherwise. The recovery proceedings shall proceed only after the Recovery Officer is fully satisfied on the aspect of the estate being inherited by the Legal Representatives/Heirs and the liability being incurred accordingly.

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Issue Recovery Certificate accordingly.

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Parties to appear before Recovery Officer concerned on 04.12.2023.

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OA/491/2022 STATE BANK OF INDIA VS BHARAT SINGH 7

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Copy of this order be sent to the applicant bank and the defendants through registered/speed post. This order be also uploaded on the official website of this Tribunal.

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Pronounced in the open Tribunal (M.M. Dhonchak) Presiding Officer DRT-2, Chandigarh

State Bank of India v. Sh. Bharat Singh

Case brief

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State Bank of India v. Sh. Bharat Singh

Case brief

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