Allowed

Punjab National Bank v. B. Dhanala

DRT22 May 2023TA/513/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the bank's application under the RDB Act for recovery of dues arising from a defaulted term loan. The defendant, who defaulted on a business loan, failed to appear. The Tribunal found the bank's evidence sufficient, affirmed liability, and permitted recovery including principal, costs, and pendent lite interest at a rate of 11% per annum.

What did the court decide?

Recovery Certificate issued directing the defendant to pay Rs. 44,93,271/- plus simple interest at 11% per annum from the date of filing till realization.

Punjab National Bank versus B. Dhanala — Contract and Commercial Disputes | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 22^nd day of May, 2023

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PRESENT: SHRI T. RAJESH

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PRESIDING OFFICER

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TA No.513 of 2022

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(Originally filed before DRT-I, Chennai as OA No.122 of 2021 and thereafter transferred to this Tribunal and renumbered as TA No.513 of 2022)

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Punjab National Bank Nungambakkam Branch No.9, Nungambakkam High Road Chennai – 600 034 Represented by its Chief Manager …Applicant

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Versus

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B. Dhanala S/o Balliya No.1, Mettu Street, Rani Anna Nagar Arumbakkam, Chennai – 600 106 …Defendant

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Counsel for the Applicant Bank : Mr. S. Vaidyanathan Counsel for Defendant : Ex-parte

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FINAL ORDER

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This application is filed by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 against the defendant for recovery of an aggregate sum of Rs.44,93,271/- with further interest at the rate of 11.9% per annum with monthly rests plus 2% penal interest from the date of the OA till the date of realization in full along with costs of this application.

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The subject matter of the case is the “Term Loan facility” availed by the defendant from the applicant.

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It is the case of the applicant that the defendant by his Loan Application dated 31.07.2015 approached the applicant for grant of Term Loan of Rs.32.50 lakhs for purchase of 6 Tata Indigo eCS-LS TDI cars for operation as Taxi cabs and the applicant bank considering the said request by its sanction letter dated 24.8.2015 sanctioned Rs.32.50 lakhs subject to terms and conditions, which were duly acknowledged by the defendant. It is stated that the defendant to secure the said facility executed hypothecation agreement dated 9.11.2015 thereby agreeing to repay the loan in 59 monthly installments of Rs.73,601/commencing from December, 2015. It is also stated that the hypothecation agreement provides for repossession of vehicles purchased out of the bank’s finance in case of default and selling them in public auction for recovery of its dues.

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It is the case of the applicant that the defendant having availed the credit facility defaulted in repayments and failed to regularize the loan account despite repeated demands and therefore the loan accounts were classified the case a NPA on 15.09.2017. It is stated that the hypothecated vehicles have since been sold in public auction as per the hypothecation agreement, however, the sale proceeds were grossly insufficient to cover the outstanding dues.

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It is the case of the applicant that after availing the loan, the defendant was irregular in remitting the loan amount. The efforts of the applicant bank to make the defendant to settle the loan did not yield any result, and hence the applicant approached this Tribunal seeking issuance of a Recovery Certificate allowing recovery of the amount due in the account.

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Summons were taken out to the defendant and the same returned unserved with endorsement “Left” and hence the defendant was served with notice by substituted service by causing paper publication. As there was no representation on behalf of the defendant on 21.12.2021 the defendant was called absent and set ex-parte on that day. Applicant Bank filed Proof Affidavit along with 6 documents, which were marked as Ex. A-1 to A-6on 03.03.2023.The Ld. Counsel for Applicant Bank made his submissions on 27.03.2023 and thereafter the matter stood till this date for passing final orders.

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The following issues arise for consideration in the matter: -

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(a) Whether the applicant had succeeded in proving the liability of the defendant?

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(b) What order as to cost of the proceedings need be passed?

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These issues are considered together.

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Heard the Ld. Counsel for the applicant, perused the OA averments and the record placed before the Tribunal.

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The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-6 along with the proof affidavit. Exhibit A-1 is the Loan Application dated 31.07.2015 submitted by the defendant. Exhibit A-2 is the sanction letter dated 25.8.2015 issued by the applicant sanctioning Term Loan of Rs.32.50 lakhs. Exhibit A-3 is the hypothecation agreement dated 9.11.2015 executed by the defendant. Exhibit A-4 and A-5 are the Balance and security

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confirmation letters dated 5.5.2017 and 02.05.2020 respectively. Exhibit A-6 is the statement of accounts in respect of the loan account along with certificates under Bankers’ Book Evidence Act.

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Exhibit A-1 evidences that the defendant by loan application dated 31.07.2015 approached the applicant for grant of Term Loan for purchase of 6 Tata Indigo eCS-LS TDI cars for operation as Taxi cabs. Exhibit A-2 evidences that the applicant bank considering the request of the defendant by its sanction letter dated 24.8.2015 sanctioned Rs.32.50 lakhs subject to terms and conditions, which were duly acknowledged by the defendant. Exhibit A-3 evidences that the defendant to secure the said facility executed hypothecation agreement dated 9.11.2015 thereby agreeing to repay the loan in 59 monthly installments of Rs.73,601/- commencing from December, 2015. Exhibit A-4 and A-5 evidences that the defendant confirmed the balance and security on 5.5.2017 and 02.05.2020 by executing balance and security confirmation letters. Exhibit A-6, the statement of accounts in respect of the loan account produced and certified under the Banker’s Book Evidence Act, clearly indicates that the amount claimed by the applicant is due from the defendant. It is clear from the statement of accounts that penal interest is not capitalized.

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The proof affidavit of the applicant bank remained unchallenged and unrebutted. Therefore, on careful consideration of proof affidavit along with Exhibits filed on behalf of the applicant bank, besides the material placed before the Tribunal, the Tribunal is satisfied that the applicant bank has successfully proved the OA claim against the defendant. Point is answered accordingly.

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In view of the foregoing, it is clearly evident that the application filed by the applicant bank is well within the period of limitation and this Tribunal possesses the territorial and pecuniary jurisdiction to entertain this OA.

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In view of the fact that the instant loan are availed by the defendants for the purpose of its business and the applicant bank has calculated and claimed interest at contractual rates till the date of filing of the OA, this Tribunal is of the view that the pendent lite interest can be awarded at reduced rates and therefore proceeds to award interest at the rate of 11% per annum (simple) and also proceeds to reject the claim for grant of penal interest.

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In view of the afore mentioned discussions, the only conclusion this Tribunal can draw is that the applicant had clearly proved the disbursement of the loan, which the applicant is entitled to realize. Hence, OA is disposed off in the following manner: -

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(a) TA No.513 of 2012 stands allowed.

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(b) Applicant is permitted to realize a sum of Rs.44,93,271/- with further interest at the rate of 11% per annum (simple) from the date of filing of the application till date of realization from the defendant, after deducting all the amounts received by them during the pendency of OA, and also by selling the other assets of the defendant.

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(d) Applicant is permitted to realize cost of the proceedings and shall file cost memo within 7 days from the date of the order.

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(e) The Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of this final order.

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Communicate a copy of the order to the parties concerned in terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993.

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(Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 22^nd day of May, 2023)

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Sd/(T. RAJESH ) PRESIDING OFFICER DRT-II, CHENNAI

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Punjab National Bank v. B. Dhanala

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. B. Dhanala

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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Case details

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