Allowed

Canara Bank v. Sri. G. Satyanarayana

DRT18 Mar 2024OA/987/2022

Case brief

AI extract

What is this about?

Recovery Tribunal allowed an original application filed by Canara Bank for recovery of Rs. 23,75,290.30 plus interest and costs from two defaulting borrowers and a guarantor after their ex-parte appearance. The bank claimed dues arising from a produce loan secured by warehouse receipts and hypothecation agreements.

What did the court decide?

The applicant bank is allowed to recover a sum of Rs. 23,75,290.30 along with current and future interest and penal interest.

Canara Bank versus Sri. G. Satyanarayana — Contract and Commercial Disputes | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL II, KARNATAKA AT BENGALURU

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Dated this 18^th Day of March, 2024

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

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OA No.987/2022

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BETWEEN:

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Canara Bank Maski Branch, Raichur District. Represented by its Manager, Mr. Parashuram L Bharamoji.

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…APPLICANT

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AND:

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Sri. G. Satyanarayana S/o Venkatareddy Adult, R/o. Shankaranagar Camp, Post: UDBAL,Tq. Hanchinal Maski, Raichur District-584 122.

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Sri. G. Kishore Adult, R/at. Shankaranagar Camp, Post: UDBAL,Tq. Hanchinal Maski, Raichur District-584 122.

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... DEFENDANTS

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Counsel on record/appeared for:

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Applicant : Sri. Manik B T Defendant Nos.1 & 2 : Exparte

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FINAL ORDER

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The present Original Application (OA) has been filed on 28.06.2022, under section 19 of the Recovery of Debts and Bankruptcy Act 1993 for recover a sum of Rs.23,75,290.30 (Rupees twenty three lakh seventy five thousand two hundred and ninety and Paise thirty only) with further interest thereon and costs, from Defendants.

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OA.No.987/2022

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The application filed is within the period of limitation as prescribed under Section 24 of the Recovery of Debts of Debts due to Banks and Financial Institutions Act 1993 and the subject recovery claim falls within the jurisdiction of this Hon’ble Tribunal.

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Brief facts of the case:

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The case of the Applicant Bank is that during its business activity, it offered credit facilities in the form of ‘Produce Loan’ (Short Term Loan) to farmers on the security of agricultural produce/hypothecation of paddy grown in their agricultural lands. Farmers store their agricultural produce/paddy bags in the approved/empanelled Warehouse. Upon receipt of agricultural goods/produce from the farmers, the warehouse owner shall issue a Warehouse receipt. Farmers, who stored their agricultural produced/goods in the Warehouse and who are in need of financial assistance, shall approach the bank and submit an application for loan along with the original Warehouse Receipt. The warehouse owner and guarantors execute guarantee agreements and create mortgage of their immovable properties in favour of the bank as security for the loans to be extended by bank within the overall loan exposure limit fixed, to the individual borrowers.

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It is the case of the applicant bank that the Defendant No.1 is the borrower, availed the loan from the bank by depositing agricultural produce at the warehouse maintained by M/s. G. Kishore Warehouse,

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OA.No.987/2022

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and three members being promoters of the said of Defendant No.2 concern. The loan sanctioned are availed by Defendant No.1 by pleading the agricultural produce/paddy bags stored with the warehouse maintained at M/s. G. Kishore Warehouse a proprietary concern. The Defendant No.2 as guarantor to the credit facilities availed by the 1^st Defendant of Rs.20,00,000/- lakh.

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The Applicant bank on 03.10.2016, the 2^nd defendant a Guarantee Covering Letter along with Guarantee Agreement and Letter of Guarantor for limit Renewal for Rs.60,00,000/- (Rupees sixty lakh only). The Guarantee Covering Letter, Guarantee Agreement and Letter of Guarantor for limit Renewal dated 03.10.2016 in favour of the Applicant Bank. The Applicant Bank on 12.01.2018, it renewed the overall Loan exposure limit of Rs.60,00,000/- (Rupees sixty lakh only) to G. Kishore Warehouse for issued of private empaneled. The sanction dated 12.01.2018 in favour of the Applicant Bank. The Applicant Bank, the 2^nd Defendant’s Warehouse, namely, G. Kishore Warehouse, was empaneled with the Applicant Bank and the 2^nd defendant executed a Simple Mortgage Deed with limit of Rs.60,00,000/- (Rupees sixty lakh only) dated 18.01.2018 in favour of the Applicant Bank.

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The 1^st defendant approached the applicant bank for Agricultural Produce Loan of Rs.20.00 lakhs vide application dated 25.01.2018 for agricultural purpose. After considering the request of Defendant No.1 sanctioned a Produce Loan of Rs.20.00 lakhs vide Sanction Memorandum dated 25.01.2018. The Defendant Nos.2

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OA.No.987/2022

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executed Guarantee Agreement and Guarantee Covering Letter dated 25.01.2018 and Hypothecation Agreement dated 25.01.2018 and Letter of Undertaking dated 25.01.2018 and Endorsement Letter dated 25.01.2018 and Demand Promissory Note and Pronote dated 25.01.2018 and Warehouse Receipt dated 25.01.2018 and Letter of Revival dated 20.01.2021 in favour of the Applicant bank.

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Applicant bank submits that, after availing the credit facility, Defendants failed and neglected to repay the dues and committed default. The Account has become NPA when the loan instalments due together with interest have not been paid as agreed. The Applicant bank issued Legal Notice dated 22.12.2020 recalling the loan amount

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due by the Defendants. The Defendants have neither replied to the notice nor made any payment to the applicant bank.

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After the filing of the OA, Summons was sent to the Defendant

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Nos.1 & 2 through Registered Post with Acknowledgment Due, the same was duly served with postal Tract Report on 31.10.2022. When OA was taken up on 08.06.2023, in spite of giving sufficient time, there was no appearance or representation from the Defendants; hence, Defendant Nos.1 & 2 were placed exparte on 08.06.2023.

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Heard the submissions of the Ld. Counsel for applicant bank and perused the records.

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To prove the case of the Applicant Bank, Sri. Parshuram L Bharamoji, Sri. Laxman, Manager filed Evidence Affidavit and the same

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was considered as AW-1 and marked at Ex.A1, the list of documents

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OA.No.987/2022

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came to be marked as Ex.A2 and the loan documents came to be marked as Ex.A3 to Ex.A16.

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As Defendants failed to contest the case, the claim of the

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applicant bank remains unchallenged. There is no contra evidence available on record to repudiate the claim of the applicant bank.

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Having regard to the amount advanced, the interest applied and the conduct and operations in the account and the default committed, this Tribunal comes to the conclusion that the applicant bank is entitled to get a final order on the following lines:-

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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 the Defendant Nos.1 & 2 to pay a sum of Rs.23,75,290.30 (Rupees twenty three lakh seventy five thousand two hundred and ninety and Paise thirty only) for Loan A/c No.0545844010759 (Rs.23,23,394.30 (Rupees twenty three lakh twenty three thousand three hundred and ninety four and Paise thirty only) as on 04.06.2022 along with unapplied interest of Rs.51,869.00 (Rupees fifty one thousand eight hundred an ninety six only) from 01.04.2022 till 14.06.200) along with current and future interest @ 10.55% p.a. compounded half yearly and penal interest 2% along with monthly rests from the date of OA application and till the date of realization.

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OA.No.987/2022

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

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(d) If the sale proceeds of the schedule mentioned properties are

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not sufficient to satisfy the dues as ordered above, the applicant bank is at liberty to proceed against the personal assets of the Defendants (both movable and immovable) and the sale proceeds be appropriated towards the balance due, as required 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 Defendants duly considering the amounts, if any, paid by Defendants and/or the amount realized by sale of assets etc., during the intervening period after the filing of the OA, enabling the Registry to 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 and

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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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OA.No.987/2022

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13. A copy of this order be communicated to the parties concerned.

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[Dictated to the Stenographer (CS), after his transcription, corrected and signed by me on this 18^th day of March 2024]

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Sd/PRESIDING OFFICER DRT-2, BENGALURU

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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

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Exhibits on the part of the Applicant:

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Exhibit	Documents
A1	Applicant Evidence
A2	List of documents
A3	Copy of Guarantee Covering Letter along with Guarante Agreement and Letter of Guarantor for Limit Renewal dated 03.10.2016 for Rs.60,00,000/- (Rupees six lakh only)
A4	Copy of Sanction Renewal with an overall loan exposure limit of Rs.60,00,000/- (Rupees six lakh only) to Kishore Warehouse dated 12.01.2018
A5	Copy of Simple Mortgage Deed with a limit of Rs.60,00,000/-(Rupees six lakh only)dated 18.01.2018
A6	Copy of Loan Application for a Produce Loan of Rs.20,00,000/- (Rupees twenty lakh only) dated 25.01.2018.
A7	Copy Sanction memorandum of a Produce Loan of Rs.20,00,000/- (Rupees twenty lakh only) dated 25.01.2018.
A8	Copy of Agreement of Hypothecation of paddy bags for the Produce Loan in support of the Loan Application of Rs.20,00,000/- (Rupees twenty lakh only) dated 25.01.2018.
A9	Copy of Guarantee Covering letter along with Guarantee Agreement for Rs.20,00,000/- (Rupees twenty lakh only) dated 25.01.2018.

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OA.No.987/2022

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A10	Copy of Letter of undertaking for Free Access to inspect to the 1^stDefendant’s goods stored in the second Defendant’s Warehouse dated 25.01.2018
A11	Copyof Endorsement Letter dated 25.01.2018
A12	Copy of Demand Promissory Note and Pronote for the Produce loan of Rs.20,00,000/- (Rupees twenty lakh only) dated 25.01.2018.
A13	Copyof warehouse Receipt dated 25.01.2018
A14	Copy of Legal Notice dated 22.12.2020 for loan A/c No. 0545844010759.
A15	Copyof Letter of Revival dated 20.01.2021
A16	Copy of Statement of Accounts dated 04.06.2022 for loan A/c No. 0545844010759.

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Witness Examined for the Defendants:-Nil – List of Documents Exhibited for the Defendants:-Nil –

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SCHEDULE – I

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Land with building belonging to Sri. G. Kishore Kumar S/o Sri. Sathyanarayana.

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Sy.No.	Extent	Village/ Taluk	District	Boundaries.
35/*/2	4.00 acres	Hanchinal Tq. Manvi	Raichur	E- Land of D Venkatesh W- Land of Sanganna N- Srimannarayan S-Hanchinal Village.

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SCHEDULE – II

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1910 bags of paddy stored in the warehouse of G. Kishore Godown at hanchinal Village valued at Rs.28,64,000/- (Rupees twenty eight lakh sixty five thousand only) stored in G. Kishore Warehouse.

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Sd/PRESIDING OFFICER DRT-2, BENGALURU

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OA.No.987/2022

Canara Bank v. Sri. G. Satyanarayana

Case brief

What is this about?

What did the court decide?

Canara Bank v. Sri. G. Satyanarayana

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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Parties & counsel

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Case details

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