Allowed

Karnataka Bank Limited v. Sri E.Murali

DRT14 May 2024OA/107/2022

Case brief

AI extract

What is this about?

The Tribunal allowed the bank's recovery application against borrowers and legal heirs. It held that heirs are liable to discharge the deceased guarantor's liability to the extent of the estate received and permitted recovery from secured property.

What did the court decide?

Claim allowed in part; Defendants liable to pay dues with interest at 10% p.a. from date of application; recovery certificate issued against secured property and personal assets of Defendants 1 and 3.

Karnataka Bank Limited versus Sri E.Murali — Banking and Recovery | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL.II^{AT HYDERABAD} DATED THIS THE 14TH DAY OF^{MAY, 2024}

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PRESENT: SH. RAMESHWAR KOTHE,^{B.COM, L.LB. (HONS.), M.A.} PRESIDING OFFICER

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ORIGINAL APPLICATION^NO. 107 OF²⁰²²

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M/s. Karnataka Bank Limited EBSR Complex, R. C. Road Tirupati - 517 501 Chittoor, A.^P. Rep by its Branch Head.

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.......Applicant.

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Versus

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Sri E. M urali S/o Late E. Balasubramanya^m Age: Major, Occ: Business Door No. 19-8-60/ 1 Hathiramji Colony, Tirupati Chittoor, Andhra Pradesh- 517501.

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Sri E. Ma hesh S/o Late E. Ba lasu brama nyam

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Age: l'lajor, Occ: Business Door No. 19-8-60/ 1 Hathiramji Colony, Tirupati Ch ittoor, Andhra Pradesh- 517501.

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Smt. E. Narmada W/o Sri E. Mu ra li

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Age: Major, Occ: Business Door No. 19-8-60/1 Hathiramji Colony, Tirupati Chittoor, Andhra Pradesh-517501. ...... Defendants.

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Counsel for the Applicant : Mr. G. Ramesh Babu Counsel for Defendant No.2. : Mr. D. Prakasam Reddy. Defendants 1& 3 : ExDarte. 0"K''"n

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:: qLD-LB ::

The Applicant Bank filed the present OA u/s 19 of The Recovery of Debts & Bankruptcy Act, 1993 for recovery of a sum of Rs.73,08,938.32ps from defendants 1 and 2 and Rs.18,90,107.53ps, from defendants 1 to 3 jointly and severally respectively totalling to Rs.91,99,045.85ps, with future interest @16.50o/o p.a. (including 5olo penal interest) compounded monthly from 11.02.2022 till the date of realisation along with costs and sale of OA schedule property.

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The averments of applicant bank as per the OA, briefly, are that 1't defendant along with his father E. Balasubramanyam^jointly availed a loan of Rs.1.10 crores for business^purposes vide sanction letter dated 25.05.2017 to be repayable in EMIs. The 1't defendant along with his wife 3'd defendant availed another loan of Rs.25 lakhs vide sanction dated 18.09.2017 with^E. Balasubramanyam being^{guarantor.Both} the^{loans are secured} by way of common security^created by^lvlr.E. Balasubramanyam by way of instrument of^{constructive re-} deposit of title deeds on^{29.05.2017and letter of authority} dated 18.09.2017. Balasubramanyam^{expired on 30.08.2019.} Due to default ln repayment, the^{loan accountshavebecome} NPA on 17.08.202r and 28.08.2021^{respectively.The} outstanding dues^{togetheraccruedto Rs.91,99,045.85ps as on} 1o.02.2022. After the death of^{Balasubra manyam, defendants1} and 2, being his^{legal heirs, are liable to discharge the liability.} Accordingly, appllcant bank issued^{legal notices tothe} respective defendants on 28.08.2021 and^{02.09 -2021} separately. In reply, 2nd^{defendant deniedthe liability. As the} /'NWir/ ^) u./'^-\wT,. I

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oA.LO7l2072

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defendants failed to discharge the liability, the present OA is filed.

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2nd defendant filed written statement denying his liability on the ground that he is not a party to the alleged loan transactions between the applicant bank and defendants 1 and 3. The secured asset being a HUF property, applicant bank cannot proceed against the share of 2nd defendant. The rate of interest charged by the applicant bank is illegal and not as per the contractual terms. Hence 2nd defendant prayed for dismissal of OA claim against 2nd defendant.

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The Applicant Bank examined Sivadi Varun Reddy, Branch Manager, as AW-1 and marked 17 documents through him as Ex. A.1 to Ex. A.17.

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Defendant's right of adducing evidence forfeited vide docket order dated 27 .L2.2023.

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Heard learned counsel for the applicant. 2nd Defendant's right of advancing arguments forfeited, Perused the material placed on record.

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The point that arises for consideration is:-

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Whether the Applicant Bank is entitled for the balance OA claim against the Defendants and the OA schedule property?

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8, According to learned counsel appearing for the applicant bank, defendants 1, along with his father late E. Balasubramanyam availed a loan of Rs.1.10 crores. The 1't defendant also availed O%rM

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another loan of^{Rs.25 lakhsalong with his wife3'd defendant'} While Late E.^{Balasubramanyamwas a joint applicant/} mortgagor to the^{loan of Rs.1.10 crores, he stood as a} guarantor to the loan availed by l't^{defendant and his wife 3'd} defendant.^{He would further contend that the sistersof late E'} Balasubrama nya m,^{relinquishedtheir share in his favourfor a} conslderation of^{RS.4O,0OO/- by way of adeed dated} f4.OZ :]-ggL.^{Accordingly, he became the absolute owner of four} fifths of HUF^{property by virtueof the relinqhishing deed dated} 14.2.1991. Therefore, the^{contention of 2nd defendantbeing} entitled to 5oo/o share of^{HUF property is not correct' However,} belng one of^{the legal heirs to the estate of late E'} Balasubra manyam,^{he cannotbe absolved of his liabilltyon the} ground of his not being a^party to the^{loan transactions Belng} one of the legal^heirs of^{late Balasubramanyam,2nd defendant} is equally liable to discharge^{the outstanding dues of the loans} to which Balasubramanyam^{was party'}

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Per contra, it is the contention^{of 2nd defendant that the subject} property being a HUF^property, applicant^{bank cannot proceed} against his share and fasten^{the liabilityon him under the} present OA proceedings. The contention^{of the 2nd defendant} does not deserve^{acceptance, as late E. Balasubramanyam} created the mortgage^{duringhis life time. However,the liability} of the 2nd defendant does^not 90^{beyond his share in the} subject property. It is^{not out of place to mention that 2"d} defendant has not^{produced any order from anycompetent} court devolving^{his shareof right in the HUFproperty. As per} Ex.A.1 sanction letter dated^{25.05.2017, late E'}

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OW't

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oa.7o7 /2022

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Balasubramanyam was the Applicant and 1st defendant herein is the joint applicant. Under such circumstances, the Evidence Affidavit of AW.1 coupled with the recitals in the documents viz., Exs. A.1 to A.17 marked on behalf of the Applicant Bank clinches the claim of the Applicant Bank against the 1st defendant individually, defendants 1 and 2 joinuy and severally to the extent of estate of late E. Balasubramanyam now lying in their hands in respect of claim of Rs.73,0g,938.32ps and against defendants 1 and 3 joinuy and severally and against defendants 7 and 2 to the extent of estate of deceased E Balasubramanyam now lying in their hands in respect of claim of Rs.18,90,107.52ps. Hence, I hold that Defendants 1 to 3 jointly and severally and also defendants 1 and 2 to the extent of estate of late E. Balasubramanyam now lying in their hand, are liable to pay the OA claim to the Applicant Bank with future interest and costs.

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In the result, the present Original Apptication No.1O7l2022 is allowed as under: -

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i) The 1't Defendant individually and defendants 1 and 2 jointly and severally to the extent of property of deceased E. Balasubramanyam now lying in their hands, are liable to pay to the Applicant Bank a sum of Rs.73,08,938.32ps, and defendants 1 and 3^jointly and severally and defendants 1 and 2 jointly and severally to the extent of estate of late E. Balasubramanyam, are liable to pay to the Applicant Bank a sum of P*"a

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Rs'18,90,107'53ps^{respectively withfuture} interest @10.50%^{p'a' simple from the date} of application^{till the date of realization;}

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ii) the OA claim^{is secured by way of mortgage} of OA schedule^{property and the applicant} bank is entitled^{to proceed againstthe same} to recovery^{its outstandingdues;}

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iii) the applicant^{bank is also entitled to proceed} against the^{person and properties of} defendants l^{and 3 for realization of its} dues; and

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iv) the applicant^{bank is entitledfor the costs'}

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The Applicant^{Bank is directed to file Cost Memo within2 weeks} from the date^{of receipt of this Order'}

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Issue Recovery^{Certificate accordingly'}

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Communicate^{a copy of this order to the partiesconcernedand} upload in^{Web Portal.}

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(Dictated to the steno,^{corrected,signed and pronouncedby me in theopencourt} on this the^{14th daY of MaY,2024)}

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PRESIDING OFFICER

Karnataka Bank Limited v. Sri E.Murali

Case brief

What is this about?

What did the court decide?

Karnataka Bank Limited v. Sri E.Murali

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

Coram

Case details

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