Allowed

State Bank of India v. M/s First Frame Media and Entertainment Solutions

DRT15 Mar 2024TA/818/2023

Case brief

AI extract

What is this about?

The Tribunal allowed the bank's application for recovery of an outstanding term loan. It rejected the claim for penal interest with monthly rests due to the business loan nature but awarded simple interest at 11% p.a.

What did the court decide?

Recovery of Rs.26,05,584/ -plus future simple interest @11% p.a. from filing date; authority to sell hypotheca and realize costs.

State Bank of India versus M/s First Frame Media… — Contract and Commercial Disputes | DRT (2024)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 15^th day of March, 2024

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PRESENT: SHRI T. RAJESH

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PRESIDING OFFICER

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TA No.818 of 2023

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(Originally filed before DRT-I Chennai as OA No.673 of 2019 and thereafter transferred to this Tribunal and renumbered as TA No.818 of 2023)

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State Bank of India Tirupattur Branch PB No.3, Krishnagiri Road Tirupattur – 635 601 …Applicant

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Versus

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M/s First Frame Media and Entertainment Solutions Represented by its Chief Executive Mr. S. Jagan, S/o Mr. N.V. Sundaram No.1, DB Centre, 1^st Floor Sacred Heart College, Tirupattur – 635 001

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Also at No.32-55/3, Palani Swamy Road Tirupattur – 635 601 …Defendant

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Counsel for the Applicant Bank : M/s C.P.R. Kamaraj Defendant : Ex- parte

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FINAL ORDER

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This application is filed by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 against the defendant for recovery of a sum of Rs.26,05,585/- together with interest at the rate of 13.20% per annum with monthly rests from the date of filing of the application till the date of realization in full along with costs of this application and schedule mentioned properties (hypotheca).

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The above Original Application is filed before DRT-I Chennai and stood transferred to this Tribunal and renumbered as above.

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The case of the applicant can be summarized as follows: -

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The defendant approached the applicant vide Loan Application dated 25.03.2013 for grant of Term Loan for setting up a sound recording and video editing studio and for working capital. The applicant considering the said request sanctioned SME Term Loan of Rs.26,56,000/- vide its sanction letter dated 1.4.2013. It is stated that the said sum along with interest is repayable in 81 Equated Monthly Installment of Rs.32,970/- commencing from July 2013 till March 2020. The defendant executed Letter of Arrangement and Agreement of Loan cum Hypothecation on 15.6.2013.

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It is further stated that even though the defendant had obliged to repay the amount promptly and regularly, but had failed to do so resulting in default in repayment and hence the account was classified as NPA on 30.1.2014. It is stated that despite classification of the account as NPA the defendant executed revival letter on 05.12.2014.

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It is contended by the applicant that the applicant’s officials had on many occasions approached the defendant requesting them to regularize the account and despite the same no effort was made by the defendants to get the account regularized or to pay back the amount.

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It is also the case of the applicant that despite repeated reminders and requests the defendant failed to make the repayment forcing the applicant to file this OA seeking recovery of the amount due in the account with further interest and costs.

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The defendant having entered appearance did not choose to file the reply statement despite availing sufficient chances and hence the chance was closed on 21.02.2020 and as thereafter also the defendant was continuously remained absent, the defendant was called absent and set ex-parte on 05.03.2024.

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The applicant had let in evidence through AW-1, who had sworn to a Proof Affidavit in terms of the pleading in the OA and also produced Exhibits A-1 to A-6 and got the same marked in evidence.

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Heard the Ld. Counsel for the Applicant and considered the contentions as taken in the OA in the light of documentary evidence and proof affidavit.

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The following issues arise for consideration in this matter: -

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(i) Whether the applicant had succeeded in proving the OA claim as against the defendant?

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(ii) What orders are to be passed?

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Both these issues are gone into and decided together.

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The case put forth by the applicant in the Application remains unrebutted as defendants remained ex-parte. The evidence tendered by the applicant remains

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uncontroverted and undisputed. The evidences put forth by the applicant were found admissible. From the statement of accounts as produced by the applicant, it is evident that the amount as claimed in the OA is outstanding in the account, which the applicant is entitled to get recovered from the defendant and its assets (including the hypotheca). The claim of the applicant is well within the period of limitation and there is no capitalization of penal interest.

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In view of the fact that the subject loan is a business loan and the applicant has charged interest at contractual rates till the date of filing and further as the interest rates have come down the Tribunal is inclined to reject the interest with monthly rests and award simple interest at reduced rates and reject the claim for award of penal interest.

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13, In view of the afore mentioned discussions, the only conclusion this Tribunal can draw is that the applicant had clearly proved the disbursement of the loan, which the applicant is entitled to realize. Hence, TA is disposed off in the following manner: -

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(a) TA No.818 of 2023 stands allowed.

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(b) Applicant is permitted to realize an amount of Rs.26,05,584/- with future and pendentelite interest @11% p.a., simple from the defendant, from the date of filing of the OA till realization, after deducting all the amounts received by them during the pendency of OA, and also by selling the hypotheca and other assets of the defendant.

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(c) If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant Bank, the defendant is personally liable for all such amounts due under the Loan Accounts.

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(d) Applicant is permitted to realize cost of the proceedings and shall file cost memo within 7 days from the date of the order.

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(e) The Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of this final 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 PS, transcribed by him, corrected, signed and pronounced by me in Open Court, on this the 15^th day of March, 2024)

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Sd/(T. RAJESH ) PRESIDING OFFICER DRT-II, CHENNAI

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State Bank of India v. M/s First Frame Media and Entertainment Solutions

Case brief

What is this about?

What did the court decide?

State Bank of India v. M/s First Frame Media and Entertainment Solutions

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

Parties & counsel

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Case details

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