Allowed

Canara Bank v. Venkata Ramarao

DRT23 Apr 2024OA/718/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed an original application filed by Canara Bank to recover a sum of Rs.40,51,503 along with future interest and penal interest from five respondents who were borrowers and their guarantors, as the application was taken ex-parte.

What did the court decide?

Recovery of Rs.40,51,503 along with future interest at 10.55% p.a. and 2% penal interest; liberty to realize by sale of schedule properties and personal assets.

Canara Bank versus Venkata Ramarao — Banking and Recovery | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL II, KARNATAKA AT BENGALURU

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Dated this 23^rd day of April 2024

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Present: SMT. S. V. GOWRAMMA Hon’ble Presiding Officer

OA NO.718/2022

BETWEEN:

Canara Bank

Basavan Gouda Building, New Bazaar, Maski, Raichur District – 584 124, Represented by its Manager and Constituted Attorney Mr.Sudhir Kumar Jetti.

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…APPLICANT

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AND :

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V. Venkata Ramarao

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S/o V. Subba Rao,

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R/a Tuggaladinni Camp,

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Manvi Taluk,

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Raichur District – 584 120.

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M/s. V. Veeraraju Warehouse

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Represented by its Promoter Yaddaladinni Camp. Manvi taluk, Raichur District – 584 120.

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Mr.V. Veeraraju

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S/o Subbarao

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R/a Tuggaladinni Camp,

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Manvi Taluk,

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Raichur District –584 120.

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V. Sathyanarayana

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S/o V. Veeraraju R/a Tuggaladinni Camp, Manvi Taluk,

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Raichur District – 584 120.

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OA No.718/2022

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V. Veerakumari W/o V. Sathyanarayana R/a Tuggaladinni Camp, Manvi Taluk, Raichur District – 584 120. …DEFENDANTS

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Counsel on record/appeared for:

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Applicant : Sri.K.Raveendran Defendant Nos.1 to 5 : Ex-parte.

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FINAL ORDER

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The present Original Application (OA) is filed on 25-05-2022, under section 19 of the Recovery of Debts due to Banks and Financial Institutions Act 1993 for recovery of a sum of Rs.40,51,503/- (Rupees Forty Lakhs Fifty One Thousand Five Hundred and Three Only) with further interest thereon from the date of filing till realization from defendants.

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The Application filed is within the period of limitation as prescribed

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under Section 24 of the Recovery of Debts Due to Banks and Financial Institutions Act 1993 and the subject recovery claim falls within the jurisdiction of this Tribunal.

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Brief facts of the case:

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The Applicant submits that during the course of its business it has been extending warehouse receipt loans to farmers those who are depositing agricultural produce at the warehouse maintained by M/s V.Veeraraju Warehouse and Mr.V.Veeraraju being promoter of the said of

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OA No.718/2022

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defendant No.1. The warehouse loans sanctioned are availed by defendant No.1 by pledging the agricultural produce that are stored with the warehouse maintained by M/s V. Veeraraju Warehouse, the 2^nd Defendant keeping in mind all the natural causes and market value concerned, the financial assistance were granted for a period of 1 year.

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The Applicant Bank submits that based on the discussion/deliberations with the 4th Defendant by the Applicant Bank, Applicant Bank sanctioned financial facilities to an overall exposure limit of Rs.50.00 lakhs to various farmers, which includes the subject loan facility availed by 1^st Defendant for a sum of Rs.25.00 lakhs against agricultural produce stored in the warehouse of M/s V. Veeraraju Warehouse. Against the above overall exposure limit, defendant No.4 & 5 created charge over the Schedule Immovable Properties by executing Regd. Simple Mortgage Deed dated 27.12.2013 registered as collateral security to the facilities availed by various farmers.

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The defendant No.3 created charge over the Schedule Immovable Properties by executing Regd. Simple Mortgage Deed dated 29.01.2015 as collateral security to the overall facilities of Rs.50.00 Lakhs which includes facilities availed by various farmers. The Applicant further submits that the Defendant No. 2 also executed guarantee agreement dated 16-03-2016 along with Guarantee Covering Letters unconditionally and irrevocably guaranteeing the repayment of the overall exposure limit of Rs.100.00 lakhs which includes Rs. 25.00 lakhs advanced to 1^st Defendant. Thus, the

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OA No.718/2022

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Defendant No.3 to 5 stood as guarantors to the Applicant Bank for the overall exposure of Rs.100 lakhs to various farmers.

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The Defendants No.3 & 4 have also executed Guarantee Covering Letter dated 18.03.2016 in favour of the Applicant Bank thereby giving personal guarantee. The defendant No.1 also executed Letter of guarantor when the limits are to be renewed in favour of the Applicant bank. By this letter the said defendants have agreed to continue their guarantee after the limits were renewed in respect of the Borrower. The defendant No.1 has made a request for sanction of Produce Loan Application for loan on Goods or documents of title to goods dated 21.02.2018. After considering the request of the said Defendant No.1, the Applicant Bank had sanctioned vide sanction memorandum dated 21.02.2018, a Produce Loan of Rs.25.00 Lakhs on the guarantee of the Defendant Nos.3 to 5 on certain terms and conditions. The said Defendant No.3 on behalf of Defendant No.1 had executed a Warehouse Receipt dated 21.02.2018 whereby informing the total value of stocks kept in the said gowdown.

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The defendant No.2 has entered into an Agreement with the Applicant Bank i.e. Agreement between the Warehouse / Cold Storage Unit and Bank dated 21.02.2018 whereby defendant No.3 has agreed to provide all the details mentioned therein in the said Agreement. The Defendant No. 1 has executed Guarantee Agreement dated 21.02.2018 in favour of the Applicant Bank for the said Produce Loan thereby giving his personal guarantee for the said loan availed. The said guarantee is a continuing

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OA No.718/2022

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guarantee. That, the Defendants No.3 & 5 have also executed Guarantee Covering Letter dated 18.03.2016 in favour of the Applicant Bank thereby giving personal guarantee. The Defendants failed to adhere to the terms and conditions of sanction, the Applicant Bank was then constrained to issue Demand Notice dated 21.02.2019 calling upon the defendants to pay the outstanding mentioned therein towards Produce loan, along with interest.

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The Applicant Bank further also issued Legal Notice dated 09.12.2020 calling upon the defendants to pay the outstanding mentioned therein. The Applicant Bank further submits that Defendant No.1 in connivance with Defendant Nos.3 to 5 removed the pledged paddy bags from Defendant No.2 godown without any permission or clearance of dues from the Applicant Bank. The defendant Nos.1 to 5 allowed release of goods without issuance of any letter of release or delivery order from the Applicant bank, the Defendant No.1 has executed Letter of Revival dated 20.02.2021 in favour of the Applicant Bank thereby acknowledging the loan availed and also confirming that the documents executed for said loan. The current and future interest payable by the defendants in respect of Term Loan is at the rate of 10.40% per annum compounded half yearly as per the terms of the agreement executed by the defendant No.1.

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The Applicant Bank is entitled to recover jointly and severally from the defendants a sum of Rs.40,51,503.00 (Rupees Forty Lakhs Fifty One Thousand Five Hundred Three Only) towards produce Loan along with

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OA No.718/2022

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future interest from the date of Application at 10.40% p.a. compounded half yearly and 2% penal interest. The Applicant Bank submits that the Defendants, after availing the loans, failed to repay the loan amount and committed default. However, there was no positive response from the defendants. Hence, this Original Application (OA) has been filed to recover the dues from the defendants.

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After the filing of the OA, summons was sent to the Defendants No.1 to 5 by RPAD on 10.07.2023 was duly served, Acknowledgment produced. When OA was taken up on 10.11.2023, even after giving sufficient time, there was no appearance or representation from the defendants, hence, Defendants No.1 to 5 was placed ex-parte on 10.11.2023.

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Heard the submissions of Counsels and perused the records.

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To prove the case, Sri. Sudhir Kumar Jitti, S/o. Shivanand, aged about 34 years, Manager and Power of Attorney Holder of the Applicant Bank, has filed Affidavit by way of evidence and same was considered as

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evidence of AW.1 and marked as Ex.A1, and documents came to be marked

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as Ex.A3 to A19. As the defendants remained ex-parte, the OA claim remains unchallenged. There is no contra evidence available on record to repudiate the claim of the Applicant Bank.

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OA No.718/2022

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Having regard to the amount advanced, the interest applied,

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documents executed, the conduct and operations in the loan account and the default committed, this Tribunal comes to the conclusion that the applicant bank is entitled to a final order on the following terms:-

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: O R D E R:

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The OA is allowed with costs,

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(a) The Applicant bank is allowed to recover from defendant Nos.1 to 5 jointly or severally, a sum of Rs.40,51,503.00 (Rupees Forty Lakhs Fifty One Thousand Five Hundred and Three Only) towards Produce Loan Account No.0545844010864 and future interest at 10.55% p.a. and 2% Penal interest with half yearly rests from the date of Application till the date full realization;

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(b) In the event of failure of the defendants to pay the aforesaid amount, the bank is at liberty to recover the amount by sale of the schedule mentioned properties in the OA;

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d) If the sale proceeds of the schedule mentioned properties are not sufficient to satisfy the dues as ordered above, the applicant bank is at liberty to sell the personal assets of the defendants (both

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OA No.718/2022

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movables and immovables) to recover the balance dues as required

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under law;

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(e) The Applicant Bank shall file the latest memo of calculation of OA amount together with interest, costs etc., to be paid by the defendants duly considering the amounts, if any, paid by the defendants and/or amount realized by sale of assets etc., during the intervening period after the filing of the OA, enabling the Registry to

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prepare Recovery Certificate for the amount to be paid by defendants to the applicant bank.

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(f) The Applicant Bank shall file memo of costs within ten days from the date of this final order.

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

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A Copy of this order be communicated to the parties concerned.

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[Dictated to the (GS), transcribed by him, corrected and signed by me on this the 23^rd day April 2024].

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Sd/-

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PRESIDING OFFICER DRT-II, BENGALURU

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Sri.Parashuram.L. Bharamoji, Manager of the Applicant Bank.

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OA No.718/2022

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Exhibits on the part of the Applicant:

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Sl. No	PARTICULARS	EXHIBITS
1.	Simple mortgage deed for agricultural advances	A3
2	Simple mortgage deed for agricultural advances	A4
3.	Guarantee Agreement	A5
4.	Guarantee Covering Letters Defendant Nos. 1, 3 & 4	A6, A7 & A8
5.	Letter of Guarantor whenever limits are to be renewed	A9
6.	Application for loan on goods or documents of title to goods along with enclosures	A10
7.	Sanction Memorandum	A11
8.	Warehouse Receipt for Rs.35.85 Lakhs	A12
9.	Agreement between the Warehouse/ cold storage unit and the Applicant	A13
10.	Guarantee Agreement	A14
11.	Guarantee Covering Letter signed by defendant Nos. 1, 3 & 4	A15
12.	Demand Notice issued by the Applicant Bank	A16
13.	Legal Notice	A17
14.	Letter of Revival	A18

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OA No.718/2022

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Statement of Account in respect of PL account No.0545844010865 along with interest sheet and A19 certificate

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Witness Examined for the Defendants:

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-Nil –

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List of Documents Exhibited for the Defendants:

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-Nil –

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SCHEDULE ‘A”

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2390 bags of Paddy weighing 75 kgs each stored in the godown of Veeraraju Warehouse Proprietor and belonging to Sri. Venkata Rama Rao S/o of Subbarao located at Yaddaladinni camp street of Yaddaladinni, Manvi Taluk, Raichur District – 584 120.

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SCHEDULE ‘B’

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Item No.1

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All that piece and parcel of land in 37 Hissa Aa, measuring 03.20 acres situated at S Ramaladinni, Manvi Taluk, Raichur District standing in the

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name of V. Satyanarayana s/o Sri. V Veeraraju and bounded on the

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East by : Land of V Veerakumari

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West by : Remaining Land North by : Cart Way South by : Land of Ramesh

OA No.718/2022

Item No.2

All that piece and parcel of land in 37 Hissa A-1, measuring 01.20 acres situated at S Ramaladinni, Manvi Taluk, Raichur District standing in the name of V. Veerakumari W/o Sri. Satyanarayana and bounded on the

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East by : Land of Amateppa

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West by : Land of V Satyanarayana

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North by : Cart Way

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South by : Land of Ramesh

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Item No.3

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All that piece and parcel of land in 20 Hissa A/2-A, measuring 02.00 acres situated at Yaddaladinni, Manvi Taluk, Raichur District standing in the name of V. Veerakumari W/o Sri. Satyanarayana and bounded on the

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East by: Land of Vishweshwar rao

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West by: Land of V Ruddraiah

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North by: Halla

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South by: Remaining Land

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Item No.4

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All that piece and parcel of land in Sy.No.17/AA, measuring 00.21 acres situated at Tuggaladinni, Manvi Taluk, Raichur District standing in the name of V Veeraraju s/o Subbarao and bounded on the

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East by : Land of Rudraiah

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West by : Land of Tirapayya

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North by : Land of Chandrappa

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South by : Canal

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Sd/PRESIDING OFFICER DRT-II, BENGALURU

Canara Bank v. Venkata Ramarao

Case brief

What is this about?

What did the court decide?

Canara Bank v. Venkata Ramarao

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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