Allowed

Bank of Baroda v. Mr. S. Padmanabhan

DRT30 Nov 2023TA/786/2023

Case brief

AI extract

What is this about?

The Tribunal allowed the Recovery Certificate application filed by Bank of Baroda against borrowers and a guarantor. The court found the debt established, dismissed limitation objections, and ordered recovery of the principal amount plus 10% simple interest.

What did the court decide?

Recovery Certificate issued for Rs.23,13,480/- with 10% simple interest from filing date to realization, recoverable from jointly or by sale of assets.

Bank of Baroda versus Mr. S. Padmanabhan — Contract and Commercial Disputes | DRT (2023)

¶1

¶2

BEFORE THE DEBTS RECOVERY TRIBUNAL-II AT CHENNAI

¶3

Dated this 30^th day of November, 2024

¶4

PRESENT: SHRI T. RAJESH

¶5

PRESIDING OFFICER

¶6

TA No.786 of 2023

¶7

(Originally filed before DRT-I Chennai as OA No.264 of 2018 and thereafter transferred to this Tribunal and renumbered as TA No.786 of 2023)

¶8

Bank of Baroda

¶9

Formerly known as Dena Bank Represented by its Chief Manager Mr. Raja Ranjit Kumar Aminjikarai Branch, No.703, P.H. Road Aminjikarai, Chennai – 600 029 …Applicant

¶10

Versus

¶11

Mr. S. Padmanabhan S/o Mr. Satyamoorthy Plot No.110, Door No.37/17 (Old Postal Door No.20) Flat No.F-6, First Floor R.K. Builders, Shanmugasundaram Street Devaraja Nagar, Saligraman Chennai – 600 093

¶12

Also at No.11, Anbar First Cross Street Kamaraj Nagar Avadi, Chennai – 600 071

¶13

Mr. N. Srinivasan S/o Mr. Navanithan No.19/2, Bajanai Koil Street Kamaraj Nagar, Avadi, Chennai – 600 071

¶14

Also at

¶15

Tech. 3 Welder, Integral Coach Factory Villivakkam, Chennai – 600 038

¶16

Mr. P. Ramachandran S/o Mr. Sathar Pichaimuthu Rep. as the Partner of M/s R.K. Builders Having office at No.91/A, 100 Feet Road Bye-pass Road, Velachery Chennai – 600 042

¶17

¶18

¶19

Mr. M. Sambandamoorthy S/o Mr. P. Manivel Represented as the Partner of M/s R.K. Builders Having Office at No.91/A, 100 Feet Road Bye-pass Road, Velacherry Chennai – 600 042 …Defendants

¶20

Counsel for the Applicant : M/s G.R. Lakshmanan Counsel for Defendant Nos. 1, 3 and 4 : Ex-parte Counsel for 2^nd defendant : Appears in person

¶21

FINAL ORDER

¶22

1. This application is filed by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 against the defendants‟ seeking issuance of a Recovery Certificate for recovery of a sum of Rs.23,13,480/- with further interest at the rate of 11.25% per annum with monthly rests from the date of filing of the OA till the date of realisation along with costs of the application and for sale of schedule properties.

¶23

The subject matter of the case Housing Loan availed by the defendants from the erstwhile Dena bank.

¶24

It is the case of the applicant that the 1^st defendant engaged in the Bore Well Works for all types of constructions, approached the applicant bank for grant of housing loan of a sum of Rs.14,75,000/- for purchase of property more fully described in Schedule „A‟ to the OA proposed to be constructed by M/s R.K. Builders and the applicant considering the said request the applicant sanctioned a sum of Rs.14,75,000/- repayable in 240 Equated Monthly Installments of Rs.13,000/- commencing from 01.01.2007. It is also the case of the applicant that the defendants executed loan documents on 13.02.2006. The 1^st defendant

¶25

¶26

¶27

deposited the title deeds dated 07.04.2006 and confirmed the same by executing Memorandum of Deposit of Title deeds dated 07.04.2006 registered as Doc. No.1835 of 2006 on the file of Register of Assurance, Virugambakkam.

¶28

It is also the case of the applicant that the defendants violated the terms and conditions of sanction and committed default in repayments and failed to regularize the loan accounts despite repeated request and hence the loan account was classified as NPA. As the defendants did not come forward to clear the outstanding dues the erstwhile applicant issued a demand notice under Section 13(2) of the SARFAESI Act on 29.06.2010, followed by possession notice dated 24.09.2010. It is the further case of the applicant that the applicant also proceeded under Section 14 of the SARFAESI Act and when the Advocate Commissioner appointed by the order of Chief Metropolitan Magistrate, Egmore, Chennai in Crl. M.P. No.2773/2011, the premises was found locked and at that time R.K. Builders came to the premises and promised to make payment of the dues to the bank. It is stated that during the visit of the Advocate Commissioner, it was found that the building was not completed and none of the flats were occupied.

¶29

It is also stated that the defendants had been engaged in siphoning off the amounts by fraudulent acts. It is further stated that the applicant bank has initiated criminal proceedings against the defendants and the same is pending.

¶30

It is the case of the applicant that after availing the loan, the defendants were irregular in remitting the loan amount and have been engaged in siphoning off

¶31

¶32

¶33

the loan funds and fraudulent acts and the criminal case initiated against defendants are pending. 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.

¶34

Summons taken out to the defendants. As there was no representation on behalf of the defendants 1, 3 and 4 continuously and on 27.11.2018, the defendants 1, 3 and 4 were called absent and set ex-parte on that day. 2^nd defendant filed reply statement on 09.11.2018. Applicant Bank filed Proof Affidavit along with 14 documents, which were marked as Ex. A-1 to A-14 on 19.05.2023. The Ld. Counsel for Applicant Bank made his submissions on 22.08.2023 and thereafter the matter stood till this date for passing final orders.

¶35

The 2^nd defendant filed reply statement contending that the OA is liable to be dismissed in limini. It contended by the 2^nd defendant that the 2^nd defendant stood as guarantor to the principal borrower by executing Letter of Guarantee dated 13.02.2006 and consented to be a guarantor for a sum of Rs.14,75,000/only. It is also contended that no property belonging to 2^nd defendant was provided as Collateral to the applicant. It is further contended that the debt being claimed against the 2^nd defendant is barred by limitation due to the fact that the debt being an unsecured debt against the 2^nd defendant, the period of limitation which commenced on 29.06.2010 ended on 28.06.2013. It is stated that the applicant has not stated in the applicant about the debt due against 2^nd defendant is not secured by any immovable property provided by the 2^nd defendant. It is

¶36

¶37

¶38

also stated that the debt due against 2^nd defendant is limited to Rs.14,75,000/-. Thus submitting the 2^nd defendant prayed for dismissing the claim against 2^nd defendant.

¶39

Applicant Bank filed proof affidavit along with 14 documents, which are marked as Exhibits A-1 to A-14.

¶40

2^nd defendant filed Counter Proof Affidavit reiterating the contentions made in the reply statement and filed the copy of the Guarantee Agreement dated 13.02.2006 in support of his contentions.

¶41

Heard the Ld. Counsel for the Applicant Bank. As there was no representation for 2^nd defendant, the 2^nd defendant was set ex-parte on 03.07.2023, however, this Tribunal proceeding to consider the contentions of the 2^nd defendant raised in Reply Statement and Counter Proof Affidavit. Perused the records.

¶42

Having heard the Ld. Counsels for the applicant and after perusing the records, the Tribunal framed the following points for consideration: -

¶43

1. Whether the applicant bank has established its claim against the defendants? If so, for what amount?

¶44

2. Whether the applicant bank is entitled for pendent lite and future interest, if so, at what rate ?

¶45

Point No.1

¶46

Whether the applicant bank has established its claim against the defendants? If so, for what amount?

¶47

The applicant bank in its endeavor to establish its claim against the defendants examined its official as AW1 and got marked Exhibits Ex.A-1 to A-14. Ld.

¶48

¶49

¶50

Counsel for Applicant placing reliance on the proof affidavit of AW-1, besides on Ex. A-1 to A-14, strenuously contended that the claim of the applicant stands established against the defendants, as such, the applicant is entitled for a recovery certificate as prayed.

¶51

Ld. Counsel further contended that the defendants 1, 3 and 4 remained absent and did not choose to put forward their case. Ld. Counsel would also contend that the 2^nd defendant though filed reply statement and counter proof affidavit did not raise any valid ground and hence the claim as against the defendants stands unrebutted.

¶52

Having heard the Ld. Counsel for the Applicant and on perusal of the records and after considering the reply statement of the 2^nd defendant, at the outset it is to be stated that the Recovery of Debts and Bankruptcy Act, 1993 (in short RDB Act) provides for recovery of “debt” which is claimed as due from any person by a bank or financial institution, payable during the course of any business activity undertaken by the bank. In this regard, reference can straightaway be made to definition under Section 2(g) of the RDB Act, which is as under: -

¶53

“(g) debt means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil Court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application and includes any liability towards debt securities which remains unpaid in full or part after notice of ninety days served upon the borrower by the debenture trustee or any other authority in whose favour security interest is created for the benefit of holders of debt securities or”

¶54

There is no dispute that about the execution of loan document and guarantee

¶55

agreement by the 2^nd defendant. Therefore, by virtue of the aforesaid definition

¶56

¶57

¶58

and the documents executed by the 2^nd defendant, it is clear that the 2^nd defendant is liable for the amount claimed by the applicant.

¶59

The only contention of the 2^nd defendant is that he has executed the guarantee agreement only for a sum of Rs.14,75,000/- and further that the same is not secured by any collateral security and hence the claim against the 2^nd defendant is barred by limitation. In so far as the contention regarding the liability under the guarantee agreement it is to be stated that the guarantee extended by the 2^nd defendant is a continuing guarantee and is therefore liable for entire amount claimed by the applicant. In so far as the limitation is concerned it is to be stated that a perusal of the statement of account reveals that the defendants have made a cash remittance of Rs.50,000/- on 31.12.2009, further the debt is also secured by a mortgage and the applicant having been filed on 14.8.2017 is therefore well within the period of limitation.

¶60

Therefore, in the light of the discussion as aforesaid, it is clear that the proof affidavit and the documents filed along with by the applicant remain unchallenged by the defendants. Further, the Tribunal on careful perusal of the unrebutted Proof Affidavit of AW-1 besides Exhibits A-1 to A-14 is fully satisfied that the applicant has established its claim. This point is answered accordingly.

¶61

Point No.2

¶62

Whether the applicant bank is entitled for pendent lite and future interest, if so, at what rate?

¶63

¶64

¶65

In terms of Sec. 19 (20) of the RDB Act, the Tribunal has been empowered to pass an order regarding payment of interest from the date on or before which payment of the amount is found due, up to the date of realisation or only payment, as it think fit to meet the ends of justice. Further, Hon‟ble Supreme Court, in the judgement (reported in II 2009 BC pg. 696) in the matter of State Bank of India – vs – Sarath Textiles, held that “ Sec. 19 (20) of the RDDB & FI Act confers discretion on the Tribunal to award interest on the applicant being as it thinks fit to meet the ends of justice. ”. Further, Hon‟ble Supreme Court of India in the matter of Central Bank of India – vs – N. Raveendra (reported in 2002 [1] SCC pg. 367) held that “ Sec. 34 of CPC confers discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit de-horse notwithstanding the contract between the parties. ” Sec. 19 (20) of the RDDB & FI Act is akin to Sec. 34 CPC.

¶66

While it is the case of the applicant that the applicant bank is entitled for contractual rate of interest till discharge of the entire outstanding dues. It is to be stated that the claim of the applicant bank includes the rate of interest and other charges payable as per the contract. The Tribunal had already held that the applicant bank is entitled for the amount claimed in the OA. As already stated, the Tribunal has awarded contractual rate of interest as claimed by the applicant bank till the date of filing the OA and in view of the fact that the subject loan is the housing loan and the lending rate had considerably come down, the Tribunal is of the view that the defendants are entitled for a reduced rate of interest. Therefore, under these circumstances, the Tribunal is inclined to grant pendente

¶67

¶68

¶69

lite and future interest @ 10% p.a. simple on the OA claim amount from the date of filing till the date of realization. Point No.2 is answered accordingly.

¶70

In view of the afore mentioned discussions, the OA is disposed off in the following manner: -

¶71

(a) TA No.786 of 2023 stands allowed.

¶72

(b) Applicant is permitted to realize an amount of Rs.23,13,480/- with further interest @10% per annum (simple) from the date of filing of the application till the date of realization in full, from the defendants jointly and severally after deducting all the amounts received by them during the pendency of OA, and also by selling the schedule properties and other assets of the defendants.

¶73

(c) If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant Bank, the defendants are personally liable for all such amounts due.

¶74

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

¶75

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

¶76

¶77

¶78

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.

¶79

(Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 30^th day of November, 2023)

¶80

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

¶81

Bank of Baroda v. Mr. S. Padmanabhan

Case brief

What is this about?

What did the court decide?

Bank of Baroda v. Mr. S. Padmanabhan

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Indian Bank versus M/s. Royal Agro and Diary Limited

M/s. Idbi Bank Ltd. versus M/s V.S Enterprises

Thangamani oil Stores versus Indian Overseas Bank

State Bank of India, versus R.M.Ezhilarasu

Tamilnad Mercantile Bank Limited versus Mr.S.Rengaraj

Idbi Bank versus Ramajayam R