Allowed

Canara Bank v. Sn Circuits Pvt. Ltd.

DRT19 Jun 2025OA/1070/2023

Case brief

AI extract

What is this about?

The Tribunal allowed the applicant's application for a recovery certificate of Rs.33.50 Lakhs against a company and its directors who guaranteed the loans, holding that the claim was valid and within limitation though interest was reduced to simple.

What did the court decide?

Issuance of Recovery Certificate for Rs.33,50,414/- with interest at 10% p.a. simple from date of OA.

Canara Bank versus Sn Circuits Pvt. Ltd. — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL II, KARNATAKA AT BENGALURU

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Dated this 19^th Day of June, 2025

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Present: Sri. T. RAJESH

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Presiding Officer

OA.No.1070/2023

BETWEEN:

CANARA BANK,

SPECIALISED SME BRANCH NO 60, 1ST MAIN, METAGALLY EXTN MYSORE -570016 REPRESENTED BY:

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ITS SENIOR MANAGER, SMT SHARADAMBA.S

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.. APPLICANT

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AND:

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1. M/S. S2N CIRCUITS PVT LTD

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REPRESENTED BY ITS DIRECTORS

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AT: PLOT NO 880, 410/413/6, WEAVER'S COLONY

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KIADB INDUSTRIAL LAYOUT

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HEBBAL, MYSORE - 570016

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2. MR RAMESH Y K

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S/O. KRISHNAMURTHY .B.K MAFOR

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ΝΟ 37/30-155/37, PLOT NO 502 KRISHNA ROYAL ROAD, GEETHA NAGAR

HYDERABAD-50056

3. MR RAJENDRA S

S/O SHIVANNA MAJOR

R/AT EWS 480, GROUND FLOOR M BLOCK,

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BEHIND GANESHA TEMPLE KUVEMPUNAGAR

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MYSURU – 570023

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4. MR PRAVEEN Y S

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S/O. SATYANANDA KRISHNA SASTRY,

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R/AT 499,12TH A MAIN YELAHANKA, BANGALORE

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.. DEFENDANTS

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2 OA/1070/2023

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Counsel on record/appeared for: Applicant : c. Vinay Swamy Defendants : ex parte

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FINAL ORDER

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The present Original Application in short OA has been filed under section 19 of Recovery of Debts and Bankruptcy Act 1993 for seeking issuance of Recovery Certificate against the defendants for Rs.33,50,414/- (Rupees Thirty Three Lakhs Fifty Thousand Four Hundred Fourteen only) with further interest thereon from the date of filing the Application till realization.

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It is the case of the applicant that, the 1^st defendant is a company represented by its directors who are arrayed as defendants 2 and 3. It is also stated that the 4^th defendant who was one of the directors of the company at the time of availment of all the three loans had guaranteed the repayment of the loans by executing agreements of guarantee in respective creditfacilities, 3rd defendant became the director of the company on 30.10.2020. The copy of company master data is produced as Annexure A 39. The directors i.e., 2nd and 3rd Defendants have also guaranteed the repayments of the loans personally. The 4th defendant is sued in his individual capacity as a guarantor. The three loans availed by defendants are as detailed out below:.

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3 OA/1070/2023

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I. TERM LOAN OF RS.28.00 LAKHS SANCTIONED ON

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09.03.2018 IN A/C NO 2510766000161, executed copy of Resolution of the board meeting dated 21.10.2017, Sanction memorandum by applicant on 09.03.2018 duly acknowledged by defendants, Letter of undertaking for loans on 16.04.2018, Deed of hypothecation on 16.04.2018, Guarantee covering letter and guarantee agreement on 05.05.2018 (2), Letter of revival on 13.05.2020, 31.03.2022.

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II. OD LIMIT OF RS 5,00,000/- SANCTIONED ON 09.03.2018 IN A/C NO 2510261010268, executed copy of board resolution dated 21.10.2017 is produced as Annexure A8, Sanction memorandum duly acknowledged by defendants on 09.03.2018, Cash credit agreement on 05.05.2018 by defendants, Pro-note on 05.05.2018, Guarantee covering letter and guarantee agreement on 05.05.2018 by 2nd defendant, Guarantee covering letter and guarantee agreement on 05.05.2018 by 4th defendant, Application for renewal by defendants on 28.10.2019, Sanction memorandum by applicant on 02.11.2019 acknowledged by defendants, Letter of renewal by defendants on 02.11.2019, Letter of revival on 03.06.2020, Sanction by applicant, duly acknowledged by defendants on 22.01.2021, Letter of renewal on 22.01.2021 by defendants, Guarantee covering

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4 OA/1070/2023

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letter along with guarantee agreement dated 23.03.2021 by 3rd defendant covering all the three loans, Sanction memorandum for renewal on 31.03.2022, Letters of renewal and revival on 31.03.2022 by defendants,

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III. LOAN UNDER GECL SCHEME OF RS 5,20,000/- SANCTIONED ON 09.06.2020, executed copy of Board resolution of the 1st defendant company dated 04.06.2020, HO circular i.e., offer letter for GECL by applicant to defendants on 05.06.2020, Letter from defendants accepting the offer for GECL loan on 06.06.2020, Sanction memorandum by applicant duly acknowledged by defendants on09.06.2020 along with an undertaking letter, Letter of undertaking from defendants on 09.06.2020, Agreement and deed of hypothecation on 09.06.2020, Pro-note by defendants on 09.06.2020, Guarantee covering letters and guarantee agreements by defendants 2 and 4 on 09.06.2020 along with an undertaking letter, Letter of undertaking from defendants on 09.06.2020, Agreement and deed of hypothecation on 09.06.2020, Pronote by defendants on 09.06.2020, Guarantee covering letters and guarantee agreements by defendants 2 and 4 on 09.06.2020.

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It is also the case of the applicant that defendants have

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5 OA/1070/2023

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undertaken to repay the liability, subject to annual review or on Demand to pay with interest for the value received and further to pay the interest at such rate as revised by the bank from time to time.

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It is also the case of the applicant that, in view of the above financed the amount, the defendant executed agreement cum deed of hypothecations dated 30.06.2020 and 22.07.2020, Debt Restructuring agreement dated 26.03.2021, Debtor credit agreement dated 26.03.2021.

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It is further contended that, despite availing the credit facilities, agreeing to service the loan account promptly and regularly, the defendant failed in complying the same, resulting in defaults in repayment and consequentially turning the loan accounts as NPA.

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In the above circumstances, the applicant approached this Tribunal by filing this OA seeking issuance of Recovery Certificate for the amount due in the account.

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Summons was taken out to the defendants, names of the Defendants were called out in the open court on 17.10.2024 and none represented, hence they were ex parte.

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6 OA/1070/2023

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The applicant let in evidence through AW-1, who filed Proof Affidavit reiterating the contentions taken in the OA and also produced Exhibits A-1 to A46 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: i) Whether the applicant had succeeded in proving the OA claim as against the defendants?

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ii) What order 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 uncontroverted and undisputed. The evidences put forth by the applicant were found admissible and are sufficient to prove availment of Housing Loan facility as stated in the OA, creation of security interest as claimed by the applicant bank and the defaults committed in the accounts. The liabilities of the defendants and the claim of the amount due are also proved by the above documents. The claim of the

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7 OA/1070/2023

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applicant is well within the limitation.

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Hence in view of the above finding which cover both the issues raised in this manner, this Tribunal is of the view that OA is liable to be allowed.

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Taking into consideration the facts that the OA claim is arrived at by calculating interest at the agreed rate, this Tribunal in view of the OA can be allowed with a reduced interest to simple.

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In the result, OA.No.1070/2023 stands allowed,

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i) The applicant is allowed to recover a sum of

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Rs.Rs.33,50,414/- (Rupees Thirty Three Lakhs Fifty

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Thousand Four Hundred Fourteen only) with interest of 10% p.a. (simple) from the date of filing OA till the realization, after giving credit to all the amount recovered and received during the pendency of the OA and allowed the same to be recovered by proceeding against the defendants jointly severally and personally and also by proceeding against their assets including the property. The schedule to the OA be the schedule to the Recovery Certificate.

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ii) The applicant bank is allowed cost of the proceeding which applicant to file cost memo within 7 days from the date of receipt of the order.

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8 OA/1070/2023

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iii) The Recovery Certificate to be drawn in terms of this

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order and transferred to Recovery for execution.

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iv) Interim Application pending, if any, stands disposed of

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with this Final Order.

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12. Communicate a copy of the order to the parties concerned

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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 the Stenographer (Unni), transcribed by her, corrected and signed and pronounced by me in the Open Court, this the 19th Day of June, 2025].

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Sd/-

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(T. RAJESH) PRESIDING OFFICER

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Sri Sushant Parashar, Senior Manager of the applicant bank.

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Exhibits on the part of the Applicant:

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Annexure	Particulars
TERM LOAN 09.03.2018	OF RS 28 LAKHS SANCTIONED ON IN A/C NO 2510766000161
A3	Certificate of Incorporation dated 12.09.2017
A4	Copy of Resolution of the board meeting dated 21.10.2017
A5	Sanction memorandum by applicant on 09.03.2018
A6	Letter of undertaking for loans by defendants on 16.04.2018
A7	Deed of hypothecation dated 16.04.2018
A8	Letter of revival dated 13.05.2020
A9	Letter of revival dated 13.05.2020

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9 OA/1070/2023

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LIMIT OF RS 5,00,000/- SANCTIONED ON 09.03.2018 IN A/C NO 2510261010268

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A10 A11	Copyof board resolution dated 21.10.2017 Sanction memorandum dated 09.03.2018
A12	Cash credit agreement dated 05.05.2018.
A13	Pro-note on 05.05.2018
A14 and A15	Guarantee covering letter and guarantee agreement by2nd defendant dated 05.05.2018
A16 and A17	Guarantee covering letter and guarantee defendant agreement by 4th defendant dated 05.05.2018
A18	Application for renewal dated 28.10.2019
A19	Sanction memorandum dated 02.11.2019
A20	Letter of renewal dated 02.11.2019
A21	Letter of revival dated 03.06.2020
A22 A23 A24 and A25	Sanction by applicant dated 22.01.2021 Letter of renewal by defendants dated 22.01.2021 Guarantee covering letter along with guarantee agreement by 3^rddefendant dated 23.03.2021
A26 to A28	Sanction memorandum for renewal dated 31.03.2022
LOAN UN SANCTIONE	DER GECL SCHEME OF RS 5,20,000/- D ON 09.06.2020
A29	Copy of Board resolution of the 1 defendant company dated 04.06.2020
A30	HO circular i.e., offer letter for GECL dated 05.06.2020
A31	Letter from defendants accepting 06.06.2020 the offer for GECL loan dated 06.06.2020
A32 and A33	Sanction memorandum along with undertaking letter defendants on dated 09.06.2020
A34	Letter of undertaking from defendants on 09.06.2020

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10 OA/1070/2023

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A35	Agreement and deed of hypothecation dated 09.06.2020
A36	Pro-note by defendants dated 09.06.2020
A37 to A40	Guarantee covering letters and 09.06.2020 guarantee agreements by defendants 2 and 4 dated 09.06.2020
A41	Company master data
A42 and A43	Legal notice along with the postal receipts dated 23.05.2023
A44 to A46	Statement of Account

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Sd/-

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(T. RAJESH) PRESIDING OFFICER

Canara Bank v. Sn Circuits Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Canara Bank v. Sn Circuits Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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