Allowed

State Bank of India v. Yenfor Ventures Private Limited

DRT11 Dec 2024OA/583/2022

Case brief

AI extract

What is this about?

The Tribunal allowed the Original Application filed by State Bank of India. The court upheld the recovery of Term Loan and GECL dues along with penal interest, having recorded the proof affidavit and documents as uncontroverted among an absent defendant.

What did the court decide?

Directing the defendants to pay Rs.28,49,31,126/- under the Term Loan and Rs.4,17,43,657/- under the GECL account with future interest, and directing the sale of scheduled properties.

State Bank of India versus Yenfor Ventures Private… — Contract and Commercial Disputes | DRT (2024)

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Fair order

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IN THE DEBTS RECOVERY TRIBUNAL-1 AT ERNAKULAM

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DATED THIS 11^th DAY OF DECEMBER, 2024

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PRESENT: Su. WILLYAHM, B.Sc., M.L. [DISTRICT JUDGE - Retd] PRESIDING OFFICER

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OA No.583/2022

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Between

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State Bank of India Stressed Assets Management Branch Raja Plaza, 1^st Floor 1112, Avinashi Road Coimbatore – 641 037 Represented by its Asst. General Manager

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---Applicant

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And

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M/s. Yenfor Ventures Private Limited Door No.4/224 C, KAM Tower Kadekkachalil, Kuttiady Post Kozhikode – 673 508 Represented by its Managing Director Muhammed Najad

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K. C. Muhammed Kutty S/o. Ammad Kadekkachalil, Kuttiady Post Vadakara Via, Kozhikode – 673 508

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Muhammad Najad S/o. K. C. Kunhammed Kutty Kadekkachalil, Kuttiady Post Vadakara Via, Kozhikode – 673 508

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OA 583/2022

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Mohammad Najmal S/o. K. C. Kunhammed Kutty Kadekkachalil, Kuttiady Post Vadakara Via, Kozhikode – 673 508

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Mohammad Najeel S/o K. C. Kunhammed Kutty Kadekkachalil, Kuttiady Post Vadakara Via, Kozhikode – 673 508

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Najmudheen M. K. S/o. Moidu M. K. Malayana Kandy House Kuttiady Post, Vadakara Via Kozhikode – 673 508

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---Defendants

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This Original Application coming on 20.11.2024 for final hearing before me in the presence of Ms. Bini Das, Advocate representing Mr. Tom K. Thomas, Counsel for Applicant Bank and Defendants having been set exparte and upon hearing the arguments of representing Counsel for the applicant Bank and upon perusing the materials on record and having stood over for consideration till this day, this Tribunal delivered the following:

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O R D E R

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This application has been filed on 05.08.2022 by the applicant bank to recover from the defendants, jointly and severally, a sum of Rs.28,49,31,126/- being the amount due under the Term Loan account No.38751839030 as on 30.06.2022 with future interest @ 9.65% per annum with monthly rests from 01.07.2022 till the date of payment; and a sum of Rs.4,17,43,657/- being the amount due under the GECL account No.39565328225 as on 30.06.2022 with future interest @ 8.30% per annum with monthly rests from 01.07.2022 till the date of payment and by sale of OA schedule properties and with costs.

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The brief averments of the application filed by the Applicant Bank are as follows:-

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Defendants 3 & 4 are the Directors of the 1^st defendant company and at the request of 1^st defendant, the applicant bank sanctioned a Term Loan of Rs.25,00,00,000/- on 02.09.2019 on due execution of necessary security documents. The Term Loan was to be repaid in 122 equated monthly installment. The defendants 2 to 6 stood as guarantors for the loan availed by the 1^st defendant and executed guarantee agreement dated 02.09.2019.

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Page 2 of 9

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OA 583/2022

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As primary security, the 2^nd defendant created equitable mortgage over his property more particularly described in the schedule ‘A’ to the OA and executed deed of mortgage dated 31.10.2019. As collateral security, the 2^nd defendant created equitable mortgage over his property more particularly described in schedule ‘B’ to the OA and executed letter of confirmation dated 03.09.2019.

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The applicant bank further on 07.07.2020 granted Guaranteed Emergency Credit Line (hereinafter referred to as ‘GECL account’) of Rs.4,19,00,000/- over and above the then existing Term Loan limit of Rs.25 Crores upon execution necessary security documents. Defendants 2 to 6 stood as guarantors to the loan and executed guarantee agreement dated 07.07.2020. The mortgage already created in respect of OA schedule property were extended by the defendants 1 & 2 and executed letter of confirmation dated 08.07.2020.

¶27

On application submitted by the 1^st defendant for extension of DCCO (Date of Commencement of Commercial Operations), the bank on 26.02.2021 enhanced the Term Loan limit to Rs.26,34,62,348/- from the then existing limit of Rs.25 Crores on due execution of necessary security documents. Defendants 2 to 6 executed guarantee agreement dated 23.04.2021 in favour of the applicant bank for the enhanced Term Loan. Defendants 1 & 2 executed letter of confirmation of extending mortgage dated 23.04.2021.

¶28

The defendants failed to adhere to the terms and conditions of the agreements and the operation of the accounts became irregular. Therefore, the applicant bank issued lawyer notice dated 19.04.2022 calling upon them to make payment of the entire amount due under the loan accounts. Since the defendants failed to settle the liabilities, the Applicant Bank has filed the OA to recover the outstanding dues from the defendants.

¶29

The defendants were duly served with summons. However, neither the defendants were represented in the proceedings nor did they file the written statement. Hence the defendants were declared exparte on 30.08.2023.

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The Applicant Bank, in order to prove its claim, has filed Proof Affidavit executed by one Mr. Ulaganathan, who is the Assistant General Manager and Authorized Officer as AW-1 and marked the documents as Exhs.A1 to A28, in support of its claim in the OA.

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It is the case of the applicant bank that defendants availed Term Loan and GECL accounts from the applicant bank and defaulted in repayment of the loan dues. The Assistant General Manager and Authorized Officer, Mr. Ulaganathan has spoken to in his proof affidavit regarding the availment

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OA 583/2022

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of credit facilities by the defendants upon execution of various documents viz. Exhs.A1 to A4 and A7 to A15 in order to prove the case of the applicant bank for realisation of the amounts claimed in the Original Application.

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The applicant has failed to produce the English translated version of document Nos.5 and 6 as per Rule 3(2) of the Debts Recovery Tribunal (Procedure) Rules, 1993. This Tribunal is not in a position to read the contents of the documents and understand the same. However, it appears that these documents pertain to the OA schedule properties.

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A perusal of the material records available on record and averments of the OA and proof affidavit along with Exhs.A1 to A28 filed by Mr. Ulaganathan, Assistant General Manager and Authorised Officer of the applicant bank, shows that the defendants after having availed the credit facilities committed default in repayment of the outstanding dues.

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The applicant bank has charged Rs.4,59,551/- as penal interest on the Term Loan account availed by the defendants in terms of the agreement. It is well settled that penal interest cannot be capitalised and no interest can be charged on penal interest. The applicant bank, therefore, is not entitled to get any further interest on the aforesaid amount of penal interest, as laid down by the Hon'ble Supreme Court of India in Central Bank of India v. Ravindra [reported in AIR 2001 SC 3095] .

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In the above circumstances, the case of the applicant bank regarding recovery of the sum of Rs.28,49,31,126/- claimed as due under the Term Loan account No.38751839030 with future interest on the sum of Rs.28,44,71,575/- @ 9.65% per annum from 01.07.2022; and further recovery of the sum of Rs.4,17,43,657/- claimed as due under the GECL account No.39565328225 with future interest @8.30% per annum from 01.07.2022 from the defendants, jointly and severally, is proved by the uncontroverted averments in the proof affidavit of AW1 along with Exts.A1 to A28.

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Accordingly, this Tribunal holds that since the applicant bank has proved its case through its proof affidavit and the documents marked, the Original Application is allowed and defendants are directed to pay to the applicant bank, jointly and severally, as per the following lines :

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(i) A sum of Rs.28,49,31,126/- (Rupees Twenty Eight Crores Forty Nine Lakhs Thirty One Thousand One Hundred Twenty Six only) due under the Term Loan account No.38751839030 with future interest on the sum of Rs.28,44,71,575/- (Rupees Twenty Eight Crores Forty Four Lakhs Seventy One Thousand Five Hundred Seventy Five only) @ 9.65% per annum from 01.07.2022 till realisation; and

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Page 4 of 9

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OA 583/2022

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(ii) A sum of Rs.4,17,43,657/- (Rupees Four Crores Seventeen Lakhs Forty Three Thousand Six Hundred Fifty Seven only) due under the GECL account No.39565328225 with future interest @ 8.30% per annum from 01.07.2022 till realisation.

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On failure to pay the above said debts to the Applicant Bank, the Applicant Bank is directed to bring the OA schedule properties, for sale to realize its dues and its proportionate costs.

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The Registry is directed to prepare DRC in terms of this final order. The Applicant Bank shall file memo of costs within 10 days from the date of this order. Registry is directed to communicate the copy of this order to both parties as provided in Rule 16 of the Debts Recovery Tribunal (Procedure) Rules, 1993, as amended in 2003.

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Typed by PS, transcribed, corrected and pronounced by me in the open court on this the 11^th day of December, 2024.

(Su. WILLYAHM)

PRESIDING OFFICER

Page 5 of 9

OA 583/2022

SCHEDULE – ‘A’

District	:	Kozhikode
Sub District	:	Kuttiadi
Taluk	:	Vatakara
Village	:	Kuttiadi
Re. Sy. No.	:	6/1
Old Sy. No.	:	31/6
Extent	:	49.79 Ares (123 Cents)

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DESCRIPTION

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All that piece and parcel of land having an extent of 49.79 Ares (123 Cents) in Re. Sy. No.6/1, Old Sy. No.31/6 of Kuttiadi Village, Vatakara Taluk, Kozhikode District together with all improvements and buildings therein obtained by K. C. Kunhammed Kutty as per Deed of Mortgage dated 31.10.2019 of Kuttiadi SRO.

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BOUNDARIES

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East	:	Poolathara Paramba
South	:	Poolathara Paramba
West	:	Poolathara Paramba
North	:	Road

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SCHEDULE – ‘B’

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District	:	Kozhikode
Sub District	:	Kuttiadi
Taluk	:	Vatakara
Village	:	Kuttiadi
Re. Sy. No.	:	6/1
Old Sy. No.	:	31/6
Extent	:	3 Acre 27 Cents

Page 6 of 9

OA 583/2022

DESCRIPTION

All that piece and parcel of land having an extent of 3 Acre 27 Cents in Re. Sy. No.6/1, Old Sy. No.31/6 of Kuttiadi Village, Vatakara Taluk, Kozhikode District together with all improvements and buildings therein obtained by K. C. Kunhammed Kutty as per Jenmom Assignment Deed No.1867/1984 dated 27.11.1984 of Kuttiadi SRO and Joint Release Deed No.39/1985 dated 08.01.1985 of Kuttiadi SRO.

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BOUNDARIES

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East	:	P.W.D. Road
South	:	Property of V. M. Naseer and Mum Road
West	:	Property of Jamal Haji and V. M. Naseer
North	:	Property of Najma and P.W.D. Road

(Su. WILLYAHM)

PRESIDING OFFICER

Page 7 of 9

OA 583/2022

LIST OF DOCUMENTS FILED BY THE APPLICANT BANK

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Sl. No.	Date	Description of doc	ument		Exhibits
1	02.09.2019	Letter of Arrangement defendants in favour of bank	executed the appli	by cant	Ex.A-1
2	02.09.2019	Agreement of loan cum executed by 1^st defen defendants 3 & 4 in applicant bank	hypotheca dant thro favour of	tion ugh the	Ex.A-2
3	02.09.2019	Guarantee agreement defendants 2 to 6 in applicant bank	executed favour of	by the	Ex.A-3
4	31.10.2019	Deed of mortgage exe defendantin favourofthe	cuted by applicant ba	2^nd nk	Ex.A-4
5	27.11.1984	Jenmom Assignment Dee of Kuttiady SRO	dno.1867/1	984	Ex.A-5
6	08.01.1985	Release Deed No.39/198 SRO	5 of Kutt	iady	Ex.A-6
7	03.09.2019	Letter of confirmation ex defendantin favourofthe	ecuted by applicant ba	2^nd nk	Ex.A-7
8	06.07.2020	Letter of Arrangement defendants in favour of bank	executed the appli	by cant	Ex.A-8
9	07.07.2020	Supplemental agreement hypothecation executed b through defendants 3 & 4 applicant bank	of loan y 1^stdefen in favour of	cum dant the	Ex.A-9
10	07.07.2020	Guarantee agreement defendants 2 to 6 in applicant bank	executed favour of	by the	Ex.A-10
11	08.07.2020	Letter of confirmation defendants 1 & 2 in applicant bank	executed favour of	by the	Ex.A-11
12	26.02.2021	Letter of arrangement defendants in favour of bank	executed the appli	by cant	Ex.A-12
13	23.04.2021	Supplemental agreement hypothecation executed b through defendants 3 & 4 applicant bank	of loan y 1^stdefen in favour of	cum dant the	Ex.A-13
14	23.04.2021	Guarantee agreement defendants 2 to 6 in applicant bank	executed favour of	by the	Ex.A-14

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OA 583/2022

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15	23.04.2021	Letter of confirmation executed by defendants 1 & 2 in favour of the applicant bank	Ex.A-15
16	23.04.2021	Revival letter executed by defendants in favouroftheapplicant bank	Ex.A-16
17	19.04.2022	Lawyer notice issued to the defendants	Ex.A-17
18	----	Postal acknowledgment card evidencing receipt of the lawyer notice by the 1^st defendant	Ex.A-18
19	----	Postal acknowledgment card evidencing receipt of the lawyer notice by the 2^nd defendant	Ex.A-19
20	----	Postal acknowledgment card evidencing receipt of the lawyer notice by the 3^rd defendant	Ex.A-20
21	----	Postal acknowledgment card evidencing receipt of the lawyer notice by the 4^th defendant	Ex.A-21
22	----	Postal acknowledgment card evidencing receipt of the lawyer notice by the 5^th defendant	Ex.A-22
23	----	Postal cover containing the lawyer notice issued to the 6^th defendant	Ex.A-23
24	----	Statement of account pertaining to the Term LoanaccountNo.38751839030	Ex.A-24
25	----	Statement of unapplied but accrued interest in respect of Term Loan account No.38751839030	Ex.A-25
26	----	Statement of penal interest in respect of Term LoanaccountNo.38751839030	Ex.A-26
27	----	Statement of account pertaining to the GECLaccountNo.39565328225	Ex.A-27
28	----	Statement of unapplied but accrued interest in respect of GECL account No.39565328225	Ex.A-28

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(Su. WILLYAHM) PRESIDING OFFICER

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State Bank of India v. Yenfor Ventures Private Limited

Case brief

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State Bank of India v. Yenfor Ventures Private Limited

Case brief

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