Allowed

Indian Overseas Bank, v. Mr. K. Rayar

DRT30 Oct 2023TA/947/2023

Case brief

AI extract

What is this about?

DRT-II Chennai allowed the bank's application for a recovery certificate. The court accepted evidence proving loan disbursement and default but rejected the claim for compound interest, awarding simple interest instead. It ordered recovery from mortgaged properties or the defendants' other assets.

What did the court decide?

Issuance of a recovery certificate for Rs.31,61,177/- with interest @10% (simple) and @6% (simple) on certain portion, executable against mortgaged and other assets.

Indian Overseas Bank, versus Mr. K. Rayar — Banking and Recovery | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 30^th day of October, 2023

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PRESENT: SHRI T. RAJESH

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PRESIDING OFFICER

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TA No.947 of 2023

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(Originally filed before DRT-III Chennai as OA No.462 of 2017 and thereafter transferred to DRT-I Chennai and renumbered as TA No.148 of 2019 and thereafter transferred to this Tribunal and renumbered as TA No.947of 2023)

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Indian Overseas Bank, Villupuram Branch, No.719, Sri Santhinathan house, Nehruji Road, Villupuram Dist – 605 602 Rep.by its Authorised Officer

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…Applicant

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Versus

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Mr. K. Rayar, S/o. Kathavarayan, No.379, Jcya Illam, TPTC Nagar, Salamedu, Villupuram Dist

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Mrs. R. Jeya, W/o. K. Rayar, No.379, Jeya Illam, TPTC Nagar, Salamedu, Villupuram Dist …Defendants Counsel for the Applicant Bank : M/s. V.Chandrasekarn Counsel for Defendants : Mr. K. Rayar

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FINAL ORDER

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This Original Application herein after been referred as OA is filed under section 19(1) of Recovery of Debts and Bankruptcy Act 1983, seeking issuance of a Recovery Certificate for Rs.31,61,177/- with future annual interest @ 18.25% per annum compounded quarterly and also with 2% penal interest @2% from the date of filing of the OA till realization in respect of the Term loan and Rs.3,70,901/- with future interest @6% per annum

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compounded quarterly and also with 2% over due interest and also by permitting the same to be recovered by proceeding against the mortgaged properties.

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The 1^st defendant availed a Term loan for Rs.9.40 Lakhs for the construction of a building on 24.07.2002. The 2^nd defendant executed personal guarantee for the said facility. It is further contented that the 2^nd defendant also applied for a Term loan and got availed the same for Rs.5 Lakhs by execution of necessary loan documents and for said facility the 1^st defendant executed the personal guarantee. It is also contented by the applicant that 1^st defendant had on 19.07.2002 deposited the title deeds pertaining to the immovable proeprties and also executed a Memorandum of Deposit of title deeds, as document no.2570 of 2007 of joint SRO II Villapuram. Apart from the above, the 1^st defendant had executed revival letters on 09.02.2005, 20.08.2007 and 17.8.2009 acknowledging the debt.

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The applicant further contents that in lieu of the credit facility availed by the 2^nd defendant the Lok Adalath villupuram awarded a settlement on 30.01.2015 for Rs.3,35,000/- against outstanding of Rs.5,61,088/- and in pursuant to the same, the 2^nd defendant had paid only Rs.10,000/-. The applicant further submits that the credit facilities availed by 1^st and 2^nd defendant were declared as NPA on 01.04.2013 and 30.4.2010 respectively. On 20.04.2015 and 20.09.2016 two letters demanding repayment were made by the applicant. Hence according to the applicant the failure of the defendants to pay back the amount forced the applicant to file this OA. Along with the OA, the applicant had filed the documents which according to them will prove the claim of the applicant.

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The 1^st defendant had filed the reply statement contenting as follows:- The OA is not maintainable. It is submitted that in respect of the subject matter suit as well as criminal complaint a filed before the Musiff court and Criminal courts. The first defendant had filed an additional written statement stating that they had already remitted an amount of Rs.16,35,205/- towards the facility. The 1^st defendant also alleged conspiracy by the applicant to help some politicians. The 1^st defendant further contents that the in respect of the credit facility availed by the 2^nd defendant, the matter is already settled. The 2^nd defendant had adopted the 1^st defendant contentions.

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The applicant had filed the proof affidavit of AW1 and got marked ExtA1 to A28 on 08.03.2019. The 1^st defendant had filed a counter proof affidavit reiterating the contentions as made in the reply statement and produced the documents which they reply in evidence an enclosure.

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All the parties had filed their written arguments before the DRT-I and there after the case got transferred to this Tribunal and renumbered as above. On 26.09.2023 the applicant’s counsel was heard.

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The following issues arise for consideration in this matter.

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i) Whether the applicant had proved the sanctioning and disbursement of the facility and entitled to seek recovery of the amount as claimed in the OA.

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ii) What orders are to be passed in respect of interest and costs.

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Since both these issues are mutually related, the same were gone into and decided together.

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The applicant is contenting that defendants 1 and 2 had availed terms loan for Rs.9.40 lakhs and 5 lakhs respectively and that the 1^st defendant had created mortgage over the properties as a security for the credit facility. It is also contended that after availing the credit facility, the defendants failed to pay back the amount as agreed and committed defaults.

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The applicant had adduced evidence though the proof affidavit and got marked Ext.A1 to A28. The availment of credit facility and the liability of defendants to pay back the amount is proved by the sanction adviser Ext.A1 and Ext.A6 and also the Demand Promissory Note executed by the defendant which were marked as Ext.A2 and Ext.A6. The agreements executed by the defendants were produced and marked as Ext.A4 and Ext.A9. The deed of guarantee declaration of hypothecated assets and letter agreeing to pay EMI produced and marked as Ext.A5, A10 and A8 respectively is also in conformity with the pleadings of the applicant as made in the OA. The subsequent agreements produced as Ext.A18 and A19, the deed of guarantee, A11 and revival letters A15, A16 and A17 also fully support the contentions of the applicant.

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The case as to the creation of mortgage is proved by Equitable mortgage confirmation letter, memorandum of deposit of title deeds, confirmation letter and the documents produced as Ext.A12, A13, A14 and A24 to A27 respectively. The statement of account as duly certified is produced and marked by the applicant evidences the outstanding in the loan account. As far the Term loan availed by the 2^nd defendant is concerned, the formality is attained by Lok Adalath settlement dated 30.01.2015.

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The defence put forth by the applicant is so formal. Neither the evidence let in by the defendants nor any documents produced by the defendants inspire confidence of this Tribunal as apart from raising some wild allegations as to the alleged mala fides, no specific defence is put forward by the defendants either in their written statement or in the proof affidavit. The so called complaints and civil suits claimed to have filed by the defendant are not sufficient to hold that they are absolved from the liability. The defendants had not succeeded in even putting forward any acceptable defence against the claim as put forward in the application.

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The documents produced by the applicant found admissible in evidence. The statement of accounts as produced by the applicant evidence that the account in it default. it also evidence that the penal interest is not levied or capitalized and the applicant is entitled to get the due amount recovered. In respect of the credit facility availed by the 2^nd defendant, the matter had reached formality by the award of the Lok Adalath. It is contented that the amount as awarded by Lok Adalath is not repaid by the defendant. Hence by virtue of Section of the RDB Act, the applicant is entitled to get a Recovery Certificate in lieu of the same.

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The claim of the applicant is well within the period of limitation. Hence on the basis of above discussion, this Tribunal is satisfied that the applicant is entitled to succeed in the OA. However the prayer for aware of compound interest is rejected and proceed to award interest at reduced rate (simple).

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In the result

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i) TA.947 of 2023 stands allowed.

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ii) The applicant is permitted to recover Rs.31,61,177/- with penal and future interest @10% (simple) on Rs.27,90,276 due in and @6% (simple) on Rs.3,70,901 from the date of filing of the OA till realization and allowed the same to be realized by selling the hypothecated machineries and scheduled properties..

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iii) If the sale proceeds are not sufficient to cover the liabilities, the defendants are personally liable and their other assets are liable to be proceeded against.

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iv) A recovery certificate to be drawn in terms of above and issued to the Recovery officer to recover the amount.

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v) Applicant is also allowed cost of the proceedings for which a cost memo is to be filed in 7 days from the date of receipt of the order.

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Communicate a copy of the order to the parties concerned in terms of Section 19(21) of RDB Act r/w Rules 16 of DRT (procedure) rules.

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

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

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Indian Overseas Bank, v. Mr. K. Rayar

Case brief

What is this about?

What did the court decide?

Indian Overseas Bank, v. Mr. K. Rayar

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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Case details

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