Allowed

Karur Vysya Bank v. Mrs. Bhavani S.

DRT7 Feb 2024OA/33/2022

Case brief

AI extract

What is this about?

This order allowed an application under Section 19(1) of the RDB Act for issuance of a recovery certificate against borrowers and a collateral management firm. The court confirmed the debt, adjusted interest, and permitted recovery from assets or personally against guarantors.

What did the court decide?

Issuance of Recovery Certificate for Rs. 1,77,19,457.86 plus 10% per annum simple interest from filing date; authority to sell schedule properties and proceed against defendants personally if proceeds

Karur Vysya Bank versus Mrs. Bhavani S. — Contract and Commercial Disputes | DRT (2024)

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IN THE DEBT RECOVERY TRIBUNAL –II CHENNAI Dated this 7^th day of February, 2024

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PRESENT: SHRI T. RAJESH PRESIDING OFFICER

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O.A. No. 33 of 2022

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Karur Vysya Bank New No: 114, Thatchur Road, Kosapalayam, Arni – 632 301 Reperesented by its Branch Manager IFSC Code: KVBL0001108

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…Applicant

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Vs.

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Mrs. Bhavani S. W/o. Mr. K. Senthilkumar, 112, Mariyamman Koil Street, Puthupattu, Nesal Post, Arni – 632 316 PAN: BVWPB7735H

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Mr. Senthilkumar K, S/o. Mr. Kesavan 112, Mariyamman Koil Street, Puthupattu, Nesal Post, Arni – 632 316

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National Collateral Management Services Ltd., Unit Nos: 505 to 509, 5^th Floor, Lodha Supremus, Off JVLR, Opp. Kanjumarg Station, Kanjumarg (East), Mumbai – 400 042 …Defendants

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Counsel for Applicant : M/s. S. L. Rajesh Defendants : Exparte

…

ORDER

The Application is filed Under Section 19(1) of the Recovery of Debts And Bankruptcy Act, 1993 seeking for issuance of a Recovery Certificate for a total sum of Rs.1,77,19,457.86P due under the three Warehouse Receipt Loan Accounts(i.e.) Rs.44,51,420.41P, Rs. 70,56,831.74 and Rs. 62,11,205.71P along with future interest and costs.

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The Applicant Bank contends that Warehouse Receipt Loan credit facilities of Rs.40,00,000/-, Rs. 50,00,000/- and Rs. 40,00,000/-were availed by the 1^st defendant. Whereas, the 2^nd Defendant stood as guarantor.The 3^rd defendant had in pursuant to service agreement for providing collateral Management service for Warehouses, had agreed that they will be responsible for the commodities stored therein, subject to natural loss.

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It is also stated that the above facilities were availed after execution of necessary loan documents by the defendants, obliging themselves to repay the amount promptly and regularly, without fail.

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The Applicant further contends that despite availing the credit facility by obliging to pay back the amount, the defendants failed in

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compliance of the same and all the efforts of the Applicant to make

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the defendants pay back the amount failed forcing the Applicant to file this Application. It is also stated that the 3^rd defendant being the custodian of goods failed in compliance of the Agreement and had issued warehouse receipts without verification leading to failure in preservation of the stocks pledged with the Applicant Bank and is therefore liable.

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Summons was taken out and as the defendant D3 failed to appear, they were set exparte on 03.11.2022. Whereas, Defendanst D1 and D2 entered appearance, but failed to file reply statement and failed to appear, subsequently, hence they were set exparte on 07.07.2023

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The Applicant let in evidence through AW1, filed proof affidavit in confirmation with the pleadings and got marked Exhs. A1 to A22.

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Heard, the following issues arise for consideration.

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I. Whether the Applicant had proved the OA claim?

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II. What orders are to be passed?

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Both these issues are decided together

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The Applicant evidence remain un-rebutted and hence proved. The documents produced by the Applicant are found to be admissible and are sufficient to produce OA claim. Hence the Applicant is to be found entitled for the OA claim. The OA claim is made within

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limitation and there is no capitalization of penal interest.The 3^rd defendant by virtue of the collateral management agreement cannot escape from the liability.Since the OA claim is arrived at by calculating interest at agreed rate, which is on the higher side, prayer for monthly rests and penal interest is declined.

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In view of the above:

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i. OA.33 of 2022stands allowed

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ii. Applicant is permitted to recover an amount of Rs.1,77,19,457.86P(Rupees One Crore Seventy Seven Lakhs Ninteen Thousand Four Hundred Fifty Seven and Eighty Six Paisa Only) with future and pendentelite interest @ 10% p.a. (simple)from the date of filing of the OA till realization from the defendantsand also proceeding against and selling the schedule mentioned properties and appropriate the sale proceeds towards the decretal dues.

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iii. If the sale proceeds are not found sufficient to cover the amounts due and payable to the Applicant Bank, the defendants D1 and D2are personally liable for all such amounts due.

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iv. It is further ordered that any amount remitted or realized during the course of the proceedings, shall be given due credit to the loan account of the defendants.

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v. A Recovery Certificate is to be drawn and issued to the recovery Officer to enable recovery of the as per the above terms.

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vi. Applicant is allowed to realize cost of the proceeding for which cost memo is to be filed in 7 days’ time from the date of receipt of the copy of the 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 PA-2, transcribed by him, corrected, signed and pronounced by me in the Open Court, this 7^th day of February, 2024)

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Sd/- (T. RAJESH)

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PRESIDING OFFICER DRT–II, CHENNAI

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Karur Vysya Bank v. Mrs. Bhavani S.

Case brief

What is this about?

What did the court decide?

Karur Vysya Bank v. Mrs. Bhavani S.

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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